Omega Corp. has entered into a transaction with Lively Inc. Omega Corp will give its equipment to Lively Inc. in exchange for Li
vely's equipment. Omega Corp will also pay Lively Inc. $30,000 cash. Omega Corp's equipment originally cost $250,000 when it was purchased 2 years ago and currently has $80,000 of accumulated depreciation and an estimated fair value of $230,000. Lively's equipment has a cost of $212,000 and accumulated depreciation of $35,000. The fair value of Lively Inc's equipment is determined to be $260,000. Required:
A. Prepare the journal entry for Omega Corp assuming the exchange has commercial substance.
B. Prepare the journal entry for Omega Corp assuming the exchange lacks commercial substance.
Answer:When a country's GDP is high it means that the country is increasing the amount of production that is taking place in the economy and the citizens have a higher income and hence are spending more. However, increase in GDP does not necessarily increase the prosperity of each and every income class of the nation.
