Karim Company exchanged equipment used in its manufacturing operations plus SAR6,000 in cash for similar...
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Accounting
Karim Company exchanged equipment used in its manufacturing operations plus SAR6,000 in cash for similar equipment used in the operations of Mansour Company. The following information pertains to the exchange.
Karim Co Mansour Co
Equipment (cost) 84,000 84,000
Accumulated depreciation 57,000 30,000
Fair value of equipment 40,500 46,500
Cash given up 6,000
Instructions
(a) Prepare the journal entries to record the exchange on the books of both companies. Assume that exchange lacks commercial substance.
(b) Prepare the journal entries to record the exchange on the books of both companies. Assume that exchange has commercial substance.
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