# (Solved Homework): Layne Co. has a machine that cost \$508,000 on March 20, 2014. This old machine had an estimated life of ten years and a salvage value of…

Layne Co. has a machine that cost \$508,000 on March 20, 2014. This old machine had an estimated life of ten years and a salvage value of \$32,000. On December 23, 2018, the old machine is exchanged for a new machine with a fair value of \$324,000. The exchange lacked commercial substance. Layne also received \$36,000 cash. Assume that the last fiscal period ended on December 31, 2017, and that straight-line depreciation is used.

Show the calculation of the amount of gain or loss to be recognized by Layne Co. from the exchange. (Round answer to 0 decimal places, e.g. 1,215.)

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(Solved Homework): Layne Co. has a machine that cost \$508,000 on March 20, 2014. This old machine had an estimated life of ten years and a salvage value of…
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Prepare all entries that are necessary on December 23, 2018. Show a check of the amount recorded for the new machine. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 1,215.)

 (a) Cost \$508,000 Accumulated depreciation (\$47,600 x 4 + \$47,600 x3/4) \$226,100 Book Value \$281,900 Fair Value (\$324,000+ \$36,000) \$360,000 Gain \$78,100 Gain Recognized \$7,810 (b) Depreciation expenses \$47,600 Accumulated Depreciation Machinery \$47,600 Accumulated Depreciation Machinery \$226,100 Machinery \$253,710 Cash \$36,000 Machinery \$508,000 Gain on Disposal of Machinery \$7,810 Fair Value \$324,000 Deferred Gain \$70,290 Basis of new machnie \$253,710

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