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Flint Corporation traded a used truck (cost $21,600, accumulated depreciation $19,440) for a small computer with a fair value of $3,564. Flint also paid $540 in the transaction. Prepare the journal entry
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Flint Corporation traded a used truck (cost $21,600, accumulated depreciation $19,440) for a small computer with a fair value of $3,564. Flint also paid $540 in the transaction. Prepare the journal entry to record the exchange, assuming the exchange lacks commercial substance

User Yanfang
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5 votes

Answer:

Dr Computer 2,700

Dr Accumulated depreciation - truck 19,440

Cr Truck - 21,600

Cr Cash 540

Step-by-step explanation:

Since the transaction lacked commercial substance, Flint must record the computer at the asset value of the truck plus the additional cash given (boot payment).

computer's basis = $21,600 - $19,440 + $540 = $2,700

User Mellow
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