申論題

五、In recent years, Freeman Transportation purchased three used buses. Because of frequent turnover in the accounting department, a different accountant selected the depreciation method for each bus, and various methods were selected. Information concerning the buses is summarized below.

For the declining-balance method, the company uses the double-declining rate. For the units-of-activity method, total miles are expected to be 120,000. Actual miles of use in the first 3 years were 2019, 24,000; 2020, 36,000; and 2021, 30,000.
 Instructions:

c. Freeman exchanged old Bus 3 (cost £92,000 less £63,000 accumulated depreciation) for new bus on January 1, 2022. The old bus had a fair value of £34,000, and Freeman also received cash of £4,000. Assume this transaction have commercial substance. Prepare the entry to record the exchange of assets. (4%)