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anyanavicka [17]
4 years ago
5

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
Business
1 answer:
lara [203]4 years ago
5 0

Answer:

Dr Computer 2,700

Dr Accumulated depreciation - truck 19,440

    Cr Truck - 21,600

    Cr Cash 540

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

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