【正文】 tly differs after exchange Answer: Dr. Land $5,250 Dr. ACC DEP 4,000 Dr. Cash 3,000 Cr. Machine $11,000 Cr. Gain 1,250 To calculate cost of land NBV of machine Less: Boot received Add: Gain recognized Land $7,000 (3,000) 1,250 $5,250 To record land ③ ④ 50 Question Time… 1. A nonmoary exchange is recognized FMV of the assets exchanged unless: a) Exchange has mercial substance b) FMV is not determinable c) The assets are similar in nature d) The assets are dissimilar Answer: b) 51 Question Time… 2. On 03/31/08, Winn Co. traded in an old machine having a carrying amount of $16,800, and paid a cash difference of $6,000 for a new machine having a total cash price of $20,500. The cash flow from the new machine are expected to be significantly different than cash flow from the old machine. On 03/31/08, what amount of loss should Winn recognize on this exchange? a) $0 b) $2,300 c) $3,700 d) $6,000 52 Question Time… Answer: b) Cash price of asset received Less: Cash difference FMV of asset exchanged Less: NBV of asset exchanged Loss on nonmoary exchange $20,500 (6,000) $14,500 ( 16,800) $2,300 2. On 03/31/08, Winn Co. traded in an old machine having a carrying amount of $16,800, and paid a cash difference of $6,000 for a new machine having a total cash price of $20,500. The cash flow from the new machine are expected to be significantly different than cash flow from the old machine. On 03/31/08, what amount of loss should Winn recognize on this exchange? Asset exchanged Asset received Boot FMV 2 + Boot given 53 D. Purchase of Group Assets 54 D Purchase of Group Assets Formula Costs of all assets acquired * Market Value of A Market Value of all assets acquired Example: Asset 1 Asset 2 Asset 3 Total FMV $ 60,000 120,000 20,000 200,000 FMV Relative FMV 60/200 120/200 20/200 Total cash cost $ 150,000 150,000 150,000 (known) X X X Allocated cost $ 45,000 90,000 15,000 Asset 1 Asset 2 Asset 3 $ 45,000 90,000 15,000 Cash $ 150,000 Dr. Cr. 55 E. Capital amp。 Acc DEP, $3,000) is traded for land with FMV of $6,000 and $500 cash. Answer: Dr. Land $6,000 Dr. ACC DEP 3,000 Dr. Loss 500 Dr. Cash 500 Cr. Machine $10,000 FMV (land) Less: NBV Add: Boot received Loss $6,000 (7,000) 500 $500 To record land (received) on B/S To calculate loss Asset exchanged Asset received Boot received Record asset received FMV of asset received Recognize Loss since (FMV received + Boot received) NBV exchanged FMV 2 + Boot received 39 C Nonmoary Exchange 10. Summary Using FMV exchanged Using FMV received No boot involved Boot given Boot received Asset received recorded G/L recognition FMV exchanged FMV exchanged + Boot given FMV exchanged Boot received FMV exchanged Less: NBV exchanged G/L No boot involved Boot given Boot received Asset received recorded G/L recognition FMV received FMV received Less: NBV exchanged G/L FMV received Less: NBV exchanged Less: Boot given G/L FMV received Less: NBV exchanged Add: Boot received G/L 40 C Nonmoary Exchange 11. Situation 7 a) Conditions ? Neither FMV is determinable ? Record asset received NBV of assets exchanged ? No G/L recognized if no boot involved ? G/L is recognized boot involved b) Accounting treatment Exception ① 41 C Nonmoary Exchange 11. Situation 7 Example: A machine (cost, $10,000。 Other Intangible Assets (P240242) K: Reporting of Cost of StartUp Activities (P242) L: R amp。 Revenue Expenditures 56 E Please see P237 amp。 Acc DEP, $3,000) and $500 cash are traded for land with FMV of $6,000. Answer: Dr. Land $6,000 Dr. ACC DEP 3,000 Dr. Loss 1,500 Cr. Machine $10,000 Cr. Cash 500 FMV (land) Less: NBV Less: Boot Loss $6,000 (7,000) (500) $1,500 To record land (received) on B/S To calculate loss Asset exchanged Asset received Boot given Record asset received FMV of asset received Recognize loss since FMV received (NBV exchanged + Boot given) FMV 2 + Boot given 37 C Nonmoary Exchange 9. Situation 6: a) Conditions ? Record asset received FMV of asset received ? G/L calculation is determined by the difference ? FMV exchanged is not determinable but FMV received determinable ? The transaction has mercial substance and not to facilitate sale ? Boot received b) Accounting treatment FMV 2 + Boot received FMV received Less: NBV exchanged Add: Boot received G/L 38 C Nonmoary Exchange 9. Situation 6 Example: A machine (cost, $10,000。 D Cost (P243) M: Computer Software Costs (P243244) M9 2 A. Acquisition Costs 3 A Acquisition Cost 1. Characteristics of Fixed Assets a) Acquired for use in operations and not for resale b) Longterm in nature and subject to depreciation c) Possess physical substance d) Fluctuate with changes in the price level Not land Tangible 2. Classification of Fixed Assets a) Land b) Building c) Equipment d) Others with physical existence 4 A Acquisition Cost 3. Valuation of Fixed Assets a) Purchased: valued Historical costs ? Stated purchase price ? Incidental costs = bring it to the