Holyfield Corporation wishes to exchange a machine used in its operations.
Holyfield has received the following offers from other companies in the industry.
Dorsett Company offered to exchange a similar machine plus $23,000. (The exchange has commercial substance for both parties.)
Winston Company offered to exchange a similar machine. (The exchange lacks commercial substance for both parties.)
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.
July 30, 2014 $ 900,000
January 30, 2015 1,500,000
May 30, 2015 1,600,000
Total payments $4,000,000
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.