Asset exchanges
Bahrain Corporation follows a policy of a 10% depreciation charge per year on machinery and a 5% depreciation charge per year on buildings.

The following transactions occurred in 2020:
March 31, 2020 A warehouse that Bahrain had purchased on January 1, 2011, for $ 1.7 million (with a current fair value of $ 1 million) was exchanged for another warehouse which also had a current fair value of $ 1 million. Depreciation has been properly charged from Jan. 1, 2011 through Dec. 31, 2019. Both parcels of land on which the warehouses were located were equal in value, and had a fair value equal to book value.
June 30, 2020 Machinery with a cost of $ 120,000 and accumulated depreciation through December 31, 2019, of $ 90,000 was exchanged, along with $ 75,000 cash, for a parcel of land with a fair market value of $ 115,000.
Instructions
Prepare all appropriate journal entries for Bahrain Corporation for the above dates.

Question

Asset exchanges
Bahrain Corporation follows a policy of a 10% depreciation charge per year on machinery and a 5% depreciation charge per year on buildings.

The following transactions occurred in 2020:
March 31, 2020	A warehouse that Bahrain had purchased on January 1, 2011, for $ 1.7 million (with a current fair value of $ 1 million) was exchanged for another warehouse which also had a current fair value of $ 1 million. Depreciation has been properly charged from Jan. 1, 2011 through Dec. 31, 2019. Both parcels of land on which the warehouses were located were equal in value, and had a fair value equal to book value.
June 30, 2020	Machinery with a cost of $ 120,000 and accumulated depreciation through December 31, 2019, of $ 90,000 was exchanged, along with $ 75,000 cash, for a parcel of land with a fair market value of $ 115,000.
Instructions
Prepare all appropriate journal entries for Bahrain Corporation for the above dates.

Quizplus · Accepted Answer

The Answer of Asset exchanges
Bahrain Corporation follows a policy of a 10% depreciation charge per year on machinery and a 5% depreciation charge per year on buildings.

The following transactions occurred in 2020:
March 31, 2020	A warehouse that Bahrain had purchased on January 1, 2011, for $ 1.7 million (with a current fair value of $ 1 million) was exchanged for another warehouse which also had a current fair value of $ 1 million. Depreciation has been properly charged from Jan. 1, 2011 through Dec. 31, 2019. Both parcels of land on which the warehouses were located were equal in value, and had a fair value equal to book value.
June 30, 2020	Machinery with a cost of $ 120,000 and accumulated depreciation through December 31, 2019, of $ 90,000 was exchanged, along with $ 75,000 cash, for a parcel of land with a fair market value of $ 115,000.
Instructions
Prepare all appropriate journal entries for Bahrain Corporation for the above dates.

Asset Exchanges Bahrain Corporation Follows a Policy of a 10% Depreciation Charge