Presented below are two independent transactions. Both transactions have commercial substance.
1. Sidney Co. exchanged old trucks (cost $64,000 less $22,000 accumulated depreciation) plus cash of $17,000 for new trucks. The old trucks had a fair market value of $36,000.
2. Lupa Inc. trades its used machine (cost $12,000 less $4,000 accumulated depreciation) for a new machine. In addition to exchanging the old machine (which had a fair market value of $9,000), Lupa also paid cash of $3,000.
Instructions
(a) Prepare the entry to record the exchange of assets by Sidney Co.
(b) Prepare the entry to record the exchange of assets by Lupa Inc.