Cedric Company recently traded in an older model computer for a new model. The old model's book value was $202,000 (original cost of $442,000 less $240,000 in accumulated depreciation) and its fair value of the old equipment is $190,000. Cedric paid $62,000 to complete the exchange which has commercial substance. Required: Prepare the journal entry to record the exchange. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Question

Mathematics

Jason Fox

25 May, 13:46

Cedric Company recently traded in an older model computer for a new model. The old model's book value was $202,000 (original cost of $442,000 less $240,000 in accumulated depreciation) and its fair value of the old equipment is $190,000. Cedric paid $62,000 to complete the exchange which has commercial substance. Required: Prepare the journal entry to record the exchange. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

+5

Answers (1)

Know the Answer?

Barbara Frey · Answer 1

Step-by-step explanation:

Given data

old model's book value = $202,000

original cost = $442,000

accumulated depreciation = $240,000

fair value of the old equipment = $190,000.

Cedric paid = $62,000

solution

in debit entry

so we have new computer value = $190,000 + $62,000 = $252000

and accumulated depreciation = $240,000

and loss on exchange = $202,000 - $190,000 = $12000

in credit

cash = $62,000

old computer = $442,000