Polar Sky Railway (PSR), a Transportation Company, Has Substantial Investments

question 64

Essay

Polar Sky Railway (PSR), a transportation company, has substantial investments in property, plant, and equipment. In 2020, the company exchanged some of these assets with other companies. [Note: any depreciation expense prior to the following transaction has already been properly recorded.] PSR transported some luxury automobiles from the port in Vancouver to Winnipeg "for free." The company does not usually transport cars on this route, so a fair value was not determinable. However, there were negligible incremental costs because doing this involved simply attaching a few extra railcars to an existing train bound for Winnipeg. For doing this, PSR received two luxury cars, which the company awarded to executives as perquisites (perks). These cars had a retail value totaling $450,000.
Required:
Record the journal entry for the above transaction on PSR's books. State your reason(s)for the chosen accounting method.

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Definitions:

Rewards

Rewards are benefits or compensations given in recognition of someone's effort, achievement, or behavior, aimed at reinforcing positive actions and encouraging continuation of such behaviors.

Self-efficacy

An individual's belief in their capacity to execute behaviors necessary to produce specific performance attainments.

Favorable Outcomes

Results or consequences of an action or situation that are beneficial or advantageous.

Master

An individual with authority or control over others, or someone highly skilled in a particular craft or subject.