Ask Question
BusinessBusiness
4 September, 05:39

Sheridan Company received $135000 in cash and a used computer with a fair value of $318000 from Carla Vista Co. for Sheridan Company's existing computer having a fair value of $453000 and an undepreciated cost of $420300 recorded on its books. The transaction has no commercial substance. How much gain should Sheridan recognize on this exchange, and at what amount should the acquired computer be recorded, respectively

+4
Answers (1)
  1. 4 September, 09:05
    0
    The gain that Sheridan should recognize on this exchange is $135000

    Explanation:

    Where Exchange Transaction lacks commercial substance, the asset that is acquired is measured at the Carrying Amount or Undepreciated Cost of the asset given up.

    The gain will then include an further consideration acquired on the exchange of an asset.

    Entries to record the exchange are as follows:

    Cash $135000 (debit)

    New Asset at undepreciated cost $420300 (debit)

    Cost of Old asset given up $420300 (credit)

    Gain on exchange $135000 (credit)

    Conclusion:

    The gain that Sheridan should recognize on this exchange is $135000
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Sheridan Company received $135000 in cash and a used computer with a fair value of $318000 from Carla Vista Co. for Sheridan Company's ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
On January 1, 2013, Deuce Inc. acquired 15% of Wiz Co.'s outstanding common stock for $62,400 and categorized the investment as an available-for-sale security. Wiz earned net income of $96,000 in 2011 and paid dividends of $36,000.
Answers (1)
You need to write a check for $167.50 from your checking account, which has a balance of $1,725.25. What percent of your balance will remain? a) 9.7% b) 23.6% c) 47.8% d) 90.3%
Answers (2)
Supernova Inc. wishes to enter a new market to expand its business. Realizing that the resources within the firm might not be significant to the new market the company has entered into an agreement with Alba Inc.
Answers (1)
In Home, the autarky relative price of apples is 5. In Foreign, the autarky relative price of apples is7. After opening to trade, which country will specialize in producing apples? a. Home b. Foreign
Answers (1)
Jim enjoys playing basketball. he figures that he makes about 50% of the field goals he attempts during a game. in this situation, we'll say success occurs when jim makes an attempted field goal. what is the value of p?
Answers (1)
New Questions in Business
What is happening to the economy in the United States? Why?
Answers (1)
In a make-or-buy decision, a. the company would consider all fixed overhead to be irrelevant. b. the company would consider the purchase price of the externally provided good to be relevant. c.
Answers (1)
3. Categories of expenditures Edison and Hilary Girard live in Swarthmore, PA. Hilary's father, Kevin, lives in Sweden. For each of the following transactions that occur in their lives, identify whether it is included in the calculation of U. S.
Answers (1)
Cullumber Company had the following transactions involving notes payable. July 1, 2019 Borrows $50,500 from First National Bank by signing a 9-month, 8% note. Nov. 1, 2019 Borrows $60,600 from Lyon County State Bank by signing a 3-month, 6% note.
Answers (1)
When a country saves a larger portion of its GDP than it did before, it will have
Answers (1)
Home » Business » Sheridan Company received $135000 in cash and a used computer with a fair value of $318000 from Carla Vista Co. for Sheridan Company's existing computer having a fair value of $453000 and an undepreciated cost of $420300 recorded on its books.
Sign Up Forgot Password?