(Nonmonetary Exchanges) On August 1, Hyde, Inc. exchanged productive assets with Wiggins, Inc. Hyde’s asset is referred to below as “Asset A,” and Wiggins’ is referred to as “Asset B.” The following facts pertain to these assets.
|
Asset A |
Asset B |
|
|
Original cost |
$96,000 |
110,000 |
|
Accumulated depreciation (to date of exchange) |
40,000 |
47,000 |
|
Fair value at date of exchange |
60,000 |
75,000 |
|
Cash paid by Hyde, Inc. |
15,000 |
|
|
Cash received by Wiggins, Inc. |
15000 |
Instructions
(a) Assuming that the exchange of Assets A and B has commercial substance, record the exchange for both Hyde, Inc. and Wiggins, Inc. in accordance with generally accepted accounting principles.
(b) Assuming that the exchange of Assets A and B lacks commercial substance, record the exchange for both Hyde, Inc. and Wiggins, Inc. in accordance with generally accepted accounting principles.