Business, 05.05.2020 09:35 valeriekbueno
Biegel Corporation purchase equipment for $120,000 on May 1, 2020. Bridge Four depreciates the equipment over 10 years using the double declining balance method of depreciation. Biegel estimates the equipment will have a salvage value of $5,000 at the end of the useful life. On December 31, 2021, Biegel Corp entered into a transaction to exchange the equipment with another company. At the time of the exchange, the old equipment has an estimated fair market value of $90,000 and Biegel paid cash of $15,000.
A.) Which of the following statements is true?
The old asset has a book value of $76,800 on the day of the exchange.
The old asset has accumulated depreciation of $23,000 on the day of the exchange.
The old asset has accumulated depreciation of $19,167 on the day of the exchange.
The old asset has a book value of $83,200 on the day of the exchange.
The old asset has a book value of 120,000 on the day of the exchange.
The old asset has an accumulated depreciation balance of $20,800 on the day of the exchange.
The old asset has accumulated depreciation of $19,200 on the day of the exchange
None of the other answer choices is correct.
B.) Which of the following statements is true if the exchange has commercial substance?
The exchange will result in a loss of $9,200.
The new fixed asset will be recorded at $105,000.
The exchange will result in a gain of $13,200.
The journal entry to record the exchange will not include a gain or a loss.
None of the other answer choices is correct.
C.) Which of the following statements is true if the exchange lacks commercial substance?
The new fixed asset will be recorded with a cost of $98,200
The journal entry to record the exchange will result in a gain of $6,800
The journal entry to record the exchange will result in a gain of $1,886.
The journal entry to record the exhange will result in a loss of $1,150.
The new fixed asset will be recorded with a cost of $105,000
The journal entry to record the exchange will result in a gain of $971.
The journal entry to record the exchange will result in a gain of $1,650.
The journal entry to record the exchange will result in a loss of $9,200.
The journal entry to record the exchange will result in a gain of $850
The new fixed asset will be recorded with a cost of $90,000
Answers: 1
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Biegel Corporation purchase equipment for $120,000 on May 1, 2020. Bridge Four depreciates the equip...
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