Assume that the following cases are independent and rely on the following data. Make entries on the books of both companies.
Jensen Co. Merton Co.
Equipment (cost) $900,000 $1,650,000
Accumulated depreciation 290,000 900,000
Fair value of equipment 700,000 700,000
1. Jensen Co. and Merton Co. traded the above equipment. The exchange has commercial substance.
Jensen Co.’s Books: Merton Co.’s Books:
2. Jensen Co. and Merton Co. traded the above equipment. The exchange lacks commercial substance.
Jensen Co.’s Books: Merton Co.’s Books:
Assume that the following cases are independent and rely on the following data. Make entries on the books of both companies.
Jensen Co. Merton Co.
Equipment (cost) $900,000 $1,650,000
Accumulated depreciation 290,000 1,050,000
Fair value of equipment 560,000 700,000
Cash received (paid) (140,000) 140,000
3. Jensen Co. and Merton Co. traded the above equipment. The exchange has commercial substance.
Jensen Co.’s Books: Merton Co.’s Books:
4. Jensen Co. and Merton Co. traded the above equipment. The exchange lacks commercial substance.
Jensen Co.’s Books: Merton Co.’s Books: