Use the Following Data for Questions 10 Through 17

question 32

Essay

Use the following data for questions 10 through 17. Each question is independent of the other questions.
Sawyer Corporation has a machine (Machine A) that it acquired on 1/1/14 for $540,000. On 12/31/14 such machines have a selling price and fair value of $621,000. When used in production, such machines have an estimated useful life of 10 years with no salvage value. Use the straight-line method.
Brown Corporation has a machine (Machine B) that it acquired on 1/1/14 for $729,000. On 12/31/14 such machines have a selling price and fair value of $540,000. When used in production, such machines have an estimated useful life of 10 years with no salvage value. Use the straight-line method.
On 12/31/14 Brown gave Machine B plus $81,000 cash to Sawyer in return for
Machine A.
-Exchange of Assets.Assume that the following cases are independent and rely on the following data. Make entries on the books of both companies. "1. Jensen Co. and Merton Co. traded the above equipment. The exchange has commercial substance.Jensen Co.'s Books: Merton Co.'s Books:""2. Jensen Co. and Merton Co. traded the above equipment. The exchange lacks commercial substance.Jensen Co.'s Books: Merton Co.'s Books:Assume that the following cases are independent and rely on the following data. Make entries on the books of both companies. ""3. Jensen Co. and Merton Co. traded the above equipment. The exchange has commercial substance.Jensen Co.'s Books: Merton Co.'s Books:""4. Jensen Co. and Merton Co. traded the above equipment. The exchange lacks commercial substance.Jensen Co.'s Books: Merton Co.'s Books:"

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Definitions:

Direct Labor Hours

The total hours worked by employees directly involved in the production of goods or services, used for cost allocation and operational planning.

Standard

A level of quality or achievement, especially one that is used as a point of reference.

Budget

An estimation of revenue and expenses over a specified future period of time, used by organizations for planning and controlling their financial resources.

Standard Cost

A predetermined cost of manufacturing, selling, or administering each product or service, used as a benchmark to measure performance.