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4 November, 14:04

Kerry, Inc., exchanged land and cash of $8,900 for equipment. The land had a book value of $64,000 and a fair value of $69,900.

Required:

Prepare the journal entry to record the exchange. Assume the exchange has commercial substance. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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  1. 4 November, 17:32
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    The journal entry is shown below:

    Equipment A/c Dr $78,800

    To Gain on exchange A/c $5,900

    To Land A/c $64,000

    To Cash A/c $8,900

    (Being the exchange is recorded and the remaining balance is credited to the gain on exchange account)

    The equipment value is computed below:

    = Fair value + exchange value

    = $69,900 + $8,900

    = $78,800
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