TRADE OF DISSIMILAR ASSETS. Woodside Paving Company purchased a paving machine 5 years ago. At acquisition the machine cost $144,000. Woodside has decided to end its paving business and become an installer of below-ground swimming pools. Therefore Woodside has just traded the paving machine for an air compressor.

At the time of the trade, the paving machine had accumulated depreciation of

$120,000. The trade-in transaction to acquire the air compressor also required Woodside to pay $24,000 cash. The fair value of the paving machine at the time of the trade was $35,000.

REQUIRED:

1. Prepare the entry to record the trade in Woodside’s journal.

2. How would the entry have been different if the fair value of the paving machine at the time of the trade had been $19,000?