(Nonmonetary Exchanges) Holyfield Corporation wishes to exchange a machine used in its operations. Holyfield has received the following offers from other companies in the industry.
1. Dorsett Company offered to exchange a similar machine plus $23,000. (The exchange has commercial substance for both parties.)
2. Winston Company offered to exchange a similar machine. (The exchange lacks commercial substance for both parties.)
3. Liston Company offered to exchange a similar machine, but wanted $3,000 in addition to Holyfield’s machine. (The exchange has commercial substance for both parties.)
In addition, Holyfield contacted Greeley Corporation, a dealer in machines. To obtain a new machine, Holyfield must pay $93,000 in addition to trading in its old machine.
|
|
Holyfield |
Dorsett |
Winston |
Liston |
Greeley |
|
Machine cost |
$160,000 |
$120,000 |
$152,000 |
$160,000 |
$130,000 |
|
Accumulated depreciation |
60,000 |
45,000 |
71,000 |
75,000 |
–0– |
|
Fair value |
92,000 |
69,000 |
92,000 |
95,000 |
185,000 |
Instructions
For each of the four independent situations, prepare the journal entries to record the exchange on the books of each company.