Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. xyz company purchased a piece of machinery by exch

XYZ company purchased a piece of machinery by exchanging one of their used pieces of...

50.1K

Verified Solution

Question

Accounting

XYZ company purchased a piece of machinery by exchanging one of their used pieces of equipment plus cash for a new machine. The used machine had a cost of $100,000 and accumulated depreciation of $50,000 and a fair value of $45,000. The list price of the new machine is $75,000, but the seller gives XYZ a trade in allowance for the used machine of $55,000.
a) Prepare the journal entry to record the purchase and be prepared to explain how you calculated the cost of the machine on XYZ's books. Assume the exchange has commercial substance.
b) How would the recording differ if the two machines do not produce significantly different cash flows for XYZ?
c) How would the recording differ if the two machines do not produce significantly different cash flows for XYZ and the transaction had produced a gain and not a loss?

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Chemistry
1.2K views

Calculate the pH for each of the following cases in the titration of 50.0 mL of...

Physics
1.2K views

5 A uniform circular disc of radius 50 cm at rest is free to turn...

Geometry
1.2K views

Which of the following equations when graphed in the xy plane will include only values...

Basic Math
1.2K views

Consider the function f x log z a Graph the function Tool help First click...

Algebra
1.2K views

ose that the cost C in dollars of removing p percent of the particulate pollution...

Accounting
1.2K views

M2-8 (Static) Recording Simple Transactions LO 2-4 Following are the transactions...

Accounting
1.2K views

Purchased 30,000 shares of Boston Company common stock for $13 per share. These shares were...

Accounting
1.2K views

2. Write all formula's you have learned to calculate curvature

Accounting
1.2K views

In this globalised dynamic environment of the 21st century, managers face various isues when required...

Accounting
1.2K views

Actuat direct labot and manulacturing overhead costs for Smith Manulacturing were $130,000 and $314,000 respecthely....

Finance
1.2K views

A 20-year, $1,000 par value bond has a 9.5% yield to maturity. The bond currently...

Accounting
1.2K views

On October 1, 2023, Dejour Energy Inc. issued a $695,000,9.0%, seven-year bond. Interest is to...