Community Bank recently traded in office fixtures. Here are the facts:

Old fixtures: New fixtures:

Cost .............. $ 96,000

Cash paid ............$ 103,000

Accumulated depreciation ....... $ 65,000

Market value ..........$ 134,000

Requirements

1. Record Community Bank’s trade-in of old fixtures for new ones. Assume the exchange had commercial substance.

2. Now let’s change one fact. Community Bank feels compelled to do business with Mountain Furniture, a bank customer, even though the bank can get the fixtures elsewhere at a better price. Community Bank is aware that the new fixtures’ market value is only $ 127,000.

Record the trade- in. Assume the exchange had commercial substance.