Troubled debt restructuring-asset swap

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Troubled Debt Restructuring-Asset Swap

McKeon Machine Company has outstanding a $210,000 note payable to Tejon Investment Corporation. Because of financial difficulties, McKeon negotiates with Tejon to exchange inventory of machine parts to satisfy the debt. The cost of the inventory transferred is carried on McKeon's books at $160,000. The estimated retail value of the inventory is $195,000. McKeon uses a perpetual inventory system.

Prepare the journal entry for the exchange on the books of McKeon Machine Company according to the requirements of ASC Subtopic 470-60. If an amount box does not require an entry, leave it blank.

Reference no: EM13794327

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