Reference no: EM132562369

Question - Rochester Shipping received a new ferry that has a normal purchase price of $1.30 million. In exchange, the company gave the vendor a parcel of land and a building located on the waterfront. The market value of the land and building is $1.15 million. The land cost $300,000; the building cost $700,000 and is 30% depreciated. The vendor will use the land and building to operate a maintenance facility. The new ferry will enable Rochester Shipping to launch a new ferry service across Lake Ontario. The ferry was available because the buyer for whom it had been built went bankrupt and was unable to take delivery. The boat remained unsold for two years before Rochester was able to negotiate the exchange. Because the boat had been dormant for so long it need some upgrading and maintenance. Rochester agreed to pay for the necessary work, which was estimated to cost $350,000. Prepare the journal entry for Rochester.