Reference no: EM131118202
Nonmonetary Exchanges Holyfield Corporation wishes to exchange a machine used in its operations. Holyfield has received the following offers from other companies in the industry.
1. Dorsett Company offered to exchange a similar machine plus $23,000. (The exchange has commercial substance for both parties.)
2. Winston Company offered to exchange a similar machine. (The exchange lacks commercial substance for both parties.)
3. Liston Company offered to exchange a similar machine, but wanted $3,000 in addition to Holyfield's machine. (The exchange has commercial substance for both parties.)
In addition, Holyfield contacted Greeley Corporation, a dealer in machines. To obtain a new machine, Holyfield must pay $93,000 in addition to trading in its old machine.
Holyfield Dorsett Winston Liston Greeley
Machine cost $160,000 $120,000 $152,000 $160,000 $130,000
Accumulated
depreciation 60,000 45,000 71,000 75,000 -0-
Fair value 92,000 69,000 92,000 95,000 185,000
For each of the four independent situations, prepare the journal entries to record the exchange on the books of each company.
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