Cuomo touring company owns a luxary motor coach it uses in long distance tours. The motor coach originaly cost the company $685,000 and depreciation taken to date amounts to $274,000. Coumo is considering several alternative methods of disposing of the motorcoach and is concerned about the financial statement impact. The alternative methods of disposal available are as follows. (treat each alternative independently)
1) The motorcoach will be sold for $365,000 cash
2) The motor coach will be exchanged for a stock investment in recreation, LTD. The value of the stock is estimated at $425,000
3)The motorcoach will be traded in on a new model valued at $925,000. A trade in allowance of $400,000 will be granted by the manufacturer with the balance paid in cash.
4)The motorcoach will be traded for a limousine owned by Barton Company. In exchange for the motorcoach, Barton will give Coumo touring company $60,000 cash, a three year $340,000 note with aface rate of 8%, and the limousine. The motor coach has an appraised value of $450,000 but fair market value of the limousine is not clear.
Question:
A)Determine the amount of gain or loss to be recognized in each of the alternatives
B)Make the journal entries to record the events above