The Following Transactions Occurred in Fiscal 2018

question 74

Essay

The following transactions occurred in fiscal 2018:
• Synthesize Inc.exchanged machinery with Energize Corp.

• Synthesize Inc.purchased equipment by signing a 5 year non-interest bearing note payable for $200,000.The implicit rate of interest was 5%.
• Synthesize received a government grant of $10,000 to help purchase the equipment.
Required:
a)Assuming the machinery exchange has commercial substance,prepare the required journal entries for the exchange for both Synthesize and Energize.
b)Assuming the machinery exchange does not have commercial substance,prepare the required journal entries for the exchange for both Synthesize and Energize.
c)Prepare the required journal entry to record the purchase of the equipment purchased by the non-interest bearing note.
d)Prepare the required journal entries to record the government grant using both the gross method and the net method.

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Definitions:

Foster Child

A child placed into a temporary or permanent caregiving situation with adults other than their biological parents.

Respondeat Superior

A doctrine in agency law under which a principal (employer) may be held liable for the wrongful acts committed by agents or employees acting within the scope of their agency or employment.

Agency Law

The legal principles governing the relationship between an agent who acts on behalf of another person or entity, known as the principal, and the extent of their legal authority.

Principal-Employer

The primary entity or individual who employs and is responsible for the actions of their workers or agents.