Durler Company purchased equipment on January 2, 2008, for $112,000 The equipment had an estimated useful life of 5 years with an estimated salvage value of $12,000 Durler uses straight line depreciation on all assets On January 2, 2012, Durler exchanged this equipment plus $12,000 in cash for newe...

Accounting Equipment 62000 Accumulated DepreciationEquipment 80000 Equipment 112000 Cash 12000 Gain ...

Durler Company purchased equipment on January 2, 2008, for $112,000. The equipment had an estimated useful life

Question:

Durler Company purchased equipment on January 2, 2008, for $112,000. The equipment had an estimated useful life of 5 years with an estimated of $12,000. Durler uses straight-line depreciation on all assets. On January 2, 2012, Durler exchanged this equipment plus $12,000 in cash for newer equipment. The old equipment has a fair value of $50,000.
Accounting
Prepare the journal entry to record the exchange on the books of Durler Company. Assume that the exchange has commercial substance.
Analysis
How will this exchange affect comparisons of the return on asset ratio for Durler in the year of the exchange compared to prior years?
Principles
How does the concept of commercial substance affect the accounting and analysis of this exchange?

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...