Carolina Co. purchased a machine at a cost of $780,000 on January 1, 2016. On January 1, 2021, the balance of the Accumulated depreciation account on this old machine is $320,000; On that day, Carolina exchanged this old machine for a new machine (the transaction has commercial substance) which has a market value of $432,000. In addition, Carolina received $48,000 cash in the exchange. Instructions (1) Prepare all the necessary journal entries for Carolina Co. on January 1, 2021. (2) Now, assume that the transaction lacks commercial substance and prepare all the necessary journal entries on January 1, 2021.

Carolina Co. purchased a machine at a cost of $780,000 on January 1, 2016. On January 1, 2021, the balance of the Accumulated depreciation account on this old machine is $320,000; On that day, Carolina exchanged this old machine for a new machine (the transaction has commercial substance) which has a market value of $432,000. In addition, Carolina received $48,000 cash in the exchange. Instructions (1) Prepare all the necessary journal entries for Carolina Co. on January 1, 2021. (2) Now, assume that the transaction lacks commercial substance and prepare all the necessary journal entries on January 1, 2021.

Name: Carolina Co. purchased a machine at a cost of $780,000 on January 1, 2
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Description: Carolina Co. purchased a machine at a cost of $780,000 on January 1, 2016. On January 1, 2021, the balance of the Accumulated depreciation account on this old machine is $320,000; On that day, Carolina exchanged this old machine for a new machine (th

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 10PA: Buchanan Imports purchased McLaren Corporation for $5,000,000 cash when McLaren had net assets worth...

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