Exploring Teal Corporation's Accounting Transactions
What was the value of the used truck traded by Teal Corporation?
The used truck traded by Teal Corporation had a cost of $23,200 and accumulated depreciation of $20,880.
What did Teal Corporation receive in exchange for the used truck?
Teal Corporation received a small computer with a fair value of $3,828 and paid $580 in the transaction.
Answer:
The used truck traded by Teal Corporation had a net book value of $2,320 ($23,200 - $20,880). In exchange for the truck, Teal Corporation received a small computer with a fair value of $3,828 and paid $580 in the transaction.
Teal Corporation's accounting transactions reveal interesting insights into their asset exchanges. The used truck, with a net book value of $2,320, was traded for a small computer worth $3,828, with an additional payment of $580.
When recording this exchange in the journal entry, the value of the assets involved must be accounted for accurately. The truck's cost and accumulated depreciation determine its net book value, which is crucial in reflecting the actual value exchanged. Additionally, the fair value of the computer received and the cash payment made must be accurately recorded to ensure the balance in the transaction.
Understanding the details of such accounting transactions is essential for financial reporting and decision-making. It allows businesses like Teal Corporation to track their asset exchanges effectively and make informed decisions regarding their resources.