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In: Accounting

On January 1, a business trades in an old piece of equipment, plus some cash, for...

  1. On January 1, a business trades in an old piece of equipment, plus some cash, for a new similar piece of equipment.  The exchange transaction HAS commercial substance.  The following information applies to this transaction:

Acquisition cost of old equipment              $50,000

Book value of old equipment                    $15,000

Additional cash payment at time of trade     $25,000

Market value of new equipment                 see below                        

   

  1. Prepare the necessary journal entry to record this transaction on January 1 assuming the new equipment has a fair market value of $38,000.

  1. Prepare the necessary journal entry to record this transaction on January 1 assuming the new equipment has a fair market value of $42,000.

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ekkarill92 answered 1 year ago
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