Question

Assuming that the exchange of Assets A and B has commercial substance, record the exchange for both Culver, Inc. and Larkspur, Inc. in accordance with generally accepted accounting principles. (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Answer 1

Step-by-step explanation:

Culver, Inc assets

Assets B. 75,000

Accumulated Depreciation

40,000

Asset A96,000

Cash. 15,000. Gain on exchange. 4,000

Larkspur Asset

(Asset B)

Asset A. 60,000. Accumulated Depreciation 47,000.

Cash. 15,000. Asset B. 110,000. Gain on exchange. 12,000. (b) let's say that the exchange of Assets A and B lacks commercial substance, record the exchange for both Culver, Inc. and Larkspur, Inc . in accordance with generally accepted accounting principles.

Culver's Asset (Asset A)

Asset B. 71,000

Accumulated Depreciation

40,000

Asset A.

96,000

Cash. 15,000

Larkspur Asset (Asset B)

Asset A. 50,400

Accumulated Depreciation

47,000

Cash. 15,000

Asset B. 110,000

Gain on exchange. 2,400.