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jok3333 [9.3K]
3 years ago
11

Hunter Sailing Company exchanged an old sailboat for a new one. The old sailboat had a cost of $300,000 and accumulated deprecia

tion of $120,000. The new sailboat had an invoice price of $326,000. Hunter received a trade in allowance of $192,000 on the old sailboat, which meant the company paid $134,000 in addition to the old sailboat to acquire the new sailboat. If this transaction has commercial substance, what amount of gain or loss should be recorded on this exchange
Business
1 answer:
FinnZ [79.3K]3 years ago
8 0

Answer:

a gain of $12,000 should be recorded on this exchange.

Explanation:

Hint : <em>Treat the Old Sailboat as if it was Sold for an Amount equal to the trade-in allowance since the transaction has commercial substance</em>

<u>Journal Entry to record the Exchange of the Old Sailboat</u>

Trade - In Allowance $192,000 (debit)

Accumulated depreciation  $120,000 (debit)

Sailboat - Cost $300,000 (credit)

Gain on Exchange of Old Sailboat $12,000 (credit)

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Suppose you purchase a $5,000 bond that pays 7% interest annually and matures in five years. If the inflation rate during the ne
galina1969 [7]

Answer:

2.88%

Explanation:

Use the following formula to calculate the real rate of return

Real rate of return = \frac{( 1 + Nominal interest rate )}{( 1 + inflation rate)} -1

Where

Nominal Interest rate = 7% = 0.07

Inflation rate = 4% = 0.04

Placing values in the formula

Real rate of return = \frac{( 1 + 0.07 )}{( 1 + 0.04)} -1

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Real rate of return = 1.0288 - 1

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3 years ago
Celestin Manufacturing Company incurred $5,000 of depreciation on its manufacturing equipment during its first year of operation
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Answer:

A. $5,000 of depreciation expense on its income statement.

Explanation:

Assuming the company uses straight line method of depreciation, then cost of depreciation is $5,000 each year.

Now, under the income statement as per GAAP, the cost of goods sold only includes the direct cost associated with manufacturing the product.

It does not included fixed cost like depreciation.

As the depreciation is fixed and does not depend on number of units produced and sold, the depreciation to be charged in income statement = $5,000.

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3 years ago
Tax that you pay when making a profit from selling a house is an example of:
UkoKoshka [18]
Tax that you pay when making a profit from selling a house is an example of: <span>A. Capital Gains Tax 
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3 years ago
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On January 1, Year 1, the Mahoney Company borrowed $164,000 cash from Sun Bank by issuing a five-year 8% term note. The principa
Georgia [21]

Answer:

Principal payment =  $27,505.00  

Explanation:

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The principal repayment in year 1 = Annual payment - Interest payment in year 1

<em>Interest payment in year = Interest rate × Principal Amount</em>

                                          =8% × 164,000

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Principal payment = $40,635 - 13,120 =  $27,505.00  

Principal payment =  $27,505.00  

8 0
3 years ago
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