【正文】 atment FMV 1+ No boot FMV exchanged Less: NBV exchanged G/L 28 C Nonmoary Exchange 4. Situation 1 Example: A machine with FMV of $5,000 (cost, $10,000。 Acc DEP, $3,000) is traded for land. Neither the FMV of the machine or the land is determinable. Answer: Dr. Land $7,000 Dr. ACC DEP 3,000 Cr. Machine $10,000 To record land (received) if no boot involved Asset exchanged Asset received Dr. Land $7,000 Dr. ACC DEP 3,000 Dr. Loss 500 Cr. Machine $10,000 Cr. Cash 500 To record land (received) if $500 given Dr. Land $7,000 Dr. ACC DEP 3,000 Dr. Cash 500 Cr. Machine $10,000 Cr. Gain 500 To record land (received) if $500 received Exception ① 42 C Nonmoary Exchange 12. Situation 8 a) Conditions ? Exchange to facilitate sale to customers, or ? Exchange lacks of mercial substance ? No boot involved ? Record asset received NBV of assets exchanged ? No Gain recognized No Gain recognized because the earnings process is not considered plete ? If a loss is indicated by the terms of the transaction, the entire loss on the exchange should be recognized. b) Accounting treatment Exception ② ,③ + No boot 43 C Nonmoary Exchange 12. Situation 8 Example: A machine with a FMV $12,000 (cost, $11,000。 Revenue Expenditures Categories of expenditures SubCategories Characteristics Accounting treatments Expensed when incurred Capitalized Other Debit (Credit) to asset Debit (Credit) to Acc. Dep. 1. Additions Extensions, enlargements, expansions X 2. Repairs and maintenance a. Ordinary: Reoccurring, relatively small expenditures i. Maintain normal operating condition X ii. Do not add materially to use value X iii. Do not extend useful life X b. Extraordinary (major): Not reoccurring, relatively large expenditures i. Primarily increase the quality and/or output of services X ii. Primarily extend useful life X 3. Replacement and improvements: Major ponent of asset is removed and replaced with the same type of ponent with parable performance capacities (replacement) or a different type of ponent having superior performance (betterment). a. Book value of old ponent is known i. Old ponent amount (X) X Recognize any proceed and loss (or gain) on old asset ii. New ponent outlay X b. Book value of old ponent is unknown i. Primarily increase the use value X ii. Primarily extends useful life X 4. Reinstallations and rearrangements: Provide greater efficiency in production or reduce production costs i. Material costs, benefits extend into future accounting periods X ii. No measurable future benefit X 57 E Capital amp。 Acc DEP, $4,000) is traded for land and $3,000 in cash. The configuration of cash flow does not significantly differs after exchange Answer: To calculate recognized gain To calculate total gain FMV of machine Less: NBV of machine Gain $12,000 7,000 $5,000 $3,000 $3,000 + 9,000 Boot received Boot received + FV of asset received X Total gain X $5,000 = $1,250 FMV exchanged Less: Boot received FMV received $12,000 (3,000) $9,000 ① ② Exception ② ,③ + Boot received FMV exchanged Less: NBV exchanged G/L 49 C Nonmoary Exchange 14. Situation 10 Example: A machine with a FMV $12,000 (cost, $11,000。 but FMV received is determinable ? The transaction has mercial substance and is not to facilitate sale ? No boot involved ? Record asset received FMV of asset received ? G/L determination b) Accounting treatment FMV 2 + No boot FMV received Less: NBV exchanged G/L 34 C Nonmoary Exchange 7. Situation 4 Example: A machine (cost, $10,000。 Revenue Expenditures (P235236) F: Depreciation (P236239) G: Disposals amp。 Acc DEP, $3,000) is traded for land. Answer: Land is recorded FMV of machine (asset exchanged) Recognized loss since FMV of machine NBV of machine Dr. Land $5,000 Dr. ACC DEP 3,000 Dr. Loss 2,000 Cr. Machine $10,000 FMV (machine) Less: NBV Loss $5,000 (7,000) $2,000 To record land (received) on B/S To calculate loss Asset exchanged Asset received FMV 1+ No boot 29 C Nonmoary Exchange 5. Situation 2: a) Conditions ? Record asset received FMV of asset exchanged + Boot given ? G/L determination ? FMV of asset exchanged (given up) is determinable ? The transaction has mercial substance and is not to facilitate sale ? Boot given b) Accounting treatment FMV 1 + Boot given Boot given does not affect G/L calculation FMV exchanged Less: NBV exchanged G/L 30 C Nonmoary Exchange 5. Situation 2 Example: A machine with FMV of $5,000 (cost, $10,000。 Acc DEP, $4,000) is traded for land. The configuration of cash flow does not significantly differs after exchange Answer: Dr. Land $7,000 Dr. ACC DEP 4,000 Cr. Machine $11,000 To record land To calculate unrecognized gain FMV of machine Less: NBV of machine Gain $12,000 (7,000) $5,000 No gain is recognized since the earnings process is not considered pleted. The unrecognized gain will be deferred. It will be recognized as the land is sold in subsequent transaction. Exception ② ,③ + No boot 44 C Nonmoary Exchange 13. Situation 9 a) Conditions ? Exchange to fa