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Plant Assets, Natural Resources, and Intangible Assets
Bell Company and Kene Company exchanged trucks on January 1, 2012. Bell's truck cost $140,000, had accumulated depreciation of $115,000, and has a fair value of $15,000. Kene's truck cost $105,000, had accumulated depreciation of $90,000, and has a fair value of $15,000.
(a)Journalize the exchange for Bell Company.
(b)Journalize the exchange for Kene Company.
Prepare the journal entries to record the following transactions for Ogleby Company which has a calendar year end and uses the straight-line method of depreciation.
a)On September 30, 2014, the company exchanged old delivery equipment and $36,000 for new delivery equipment. The old delivery equipment was purchased on January 1, 2012, for $126,000 and was estimated to have a $18,000 salvage value at the end of its 5-year life. Depreciation on the delivery equipment has been recorded through December 31, 2013. It is estimated that the fair value of the old delivery equipment is $54,000 on September 30, 2014.
(b)On June 30, 2014, the company exchanged old office equipment and $40,000 for new office equipment. The old office equipment originally cost $80,000 and had accumulated depreciation to the date of disposal of $35,000. It is estimated that the fair market value of the old office equipment on June 30 was $60,000. The transaction has commercial substance.