Answer:
See the journal entries below.
Explanation:
<u>In the Book of Cynthia Co.</u>
Book value of Building 24 = Cost of Building 24 - Accumulated depreciation of Building 24 = $7,600,000 - $3,619,000 = $3,981,000
Gain on disposal of Building 24 = Building 24 an appraised value of - Book value of Building 24 = $4,800,000 - $3,981,000 = $819,000
Basis for Building M = Building M appraisal value - Gain on disposal of Building 24 = $4,560,000 - $819,000 = $3,741,000
Cash = Accumulated Depreciation of Building 24 + Basis for Building M - Cost of Building 24 - Gain on Disposal of Building 24 = $3,619,000 + $3,741,000 - 7,600,000 - $819,000 = $1,059,000
The journal entries will look as follows:
<u>Accounts Title Debit ($) Credit ($) </u>
Accumulated Depreciation 3,619,000
Building M 3,741,000
Cash 1,059,000
Building 24 7,600,000
Gain on Disposal 819,000
<u><em>To record the exchange of Building 24 for Building M from Waterway Co. </em></u>
<u>In the Book of Waterway Co. </u>
Building 24 = Building M cost + Cash - Building M depreciation = $9,096,000 + $1,059,000 - $4,747,000 = $5,408,000
The journal entries will look as follows:
<u>Accounts Title Debit ($) Credit ($) </u>
Accumulated Depreciation 4,747,000
Building 24 5,408,000
Building M 9,096,000
Cash 1,059,000
<u><em>To record the exchange of Building M for Building 24 from Cynthia Co. </em></u>
