Part 1: Equipment purchased on Jan, 1 2004 and installed Jan 15. Use began on Jan 30. The following amounts were expenditures related to the equipment ( all amounts are considered material).
Invoice price 100,000
Discount of 2% taken for paying within 10 days
Delivery charges 1,000
Set up costs 2,500
Repair of asset prior to installation 3,000
Costs of training employees to use equipment 5,000
Increase electricity and ventilation costs for equipment 4,000
Costs of repair of equipment,incurred on July 1st 6,000
Direct materials costs for a base built for equipment 5,400
Overhead costs for building base for equipment 3,600
Calculate total amount that should be considered acquisition cost of the equipment for depreciation purposes.
Part 2:
AB company and XY company agree to exchange assets. see the following information:
AB Company-------------------- XY Company
Original cost 50,000--------------- 60,000
Accum. depr. 30,000 --------------- 40,000
Fair Market Value 24,000 ---------- 30,000
AB company agrees to pay 6,000 cash to XY company in the exchange.
Required:
1. assuming the assets are considered dissimilar assets, make the necessary journal entries to record the exchange for both parties.
2. Assuming the assets are considered similar assets, make the necessary journal entries to record the exchange for both parties.