Stewart Company exchanges an asset with Leonard Corporation. Details of the exchange are as follows: Stewart company’s Piece of Equipment: Cost $1,000,000 Accumulated depreciation 400,000 Fair Value $800,000 Leonard Corporation’s Building: Cost $1200,000 Accumulated depreciation $550,000 Fair Value $950,000 Required a) Prepare the appropriate journal entries for both companies for the above exchange assuming they are public companies. b) If Stewart Company paid $100,000 in this transaction. Record the appropriate journal entry in Stewart’s books. c) Repeat b) assuming that Stewart Company is a private company and that the fair value of Leonard’s building is the most determinable fair value
Stewart Company exchanges an asset with Leonard Corporation. Details of the exchange are as follows: Stewart company’s Piece of Equipment: Cost $1,000,000 Accumulated depreciation 400,000 Fair Value $800,000 Leonard Corporation’s Building: Cost $1200,000 Accumulated depreciation $550,000 Fair Value $950,000 Required a) Prepare the appropriate journal entries for both companies for the above exchange assuming they are public companies. b) If Stewart Company paid $100,000 in this transaction. Record the appropriate journal entry in Stewart’s books. c) Repeat b) assuming that Stewart Company is a private company and that the fair value of Leonard’s building is the most determinable fair value
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Stewart Company exchanges an asset with Leonard Corporation. Details of the exchange are as follows:
Stewart company’s Piece of Equipment:
Cost $1,000,000
Fair Value $800,000
Leonard Corporation’s Building:
Cost $1200,000
Accumulated depreciation $550,000
Fair Value $950,000
Required
a) Prepare the appropriate journal entries for both companies for the above exchange assuming
they are public companies.
b) If Stewart Company paid $100,000 in this transaction. Record the appropriate
Stewart’s books.
c) Repeat b) assuming that Stewart Company is a private company and that the fair value of
Leonard’s building is the most determinable fair value
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