1) Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange lacks commercial substance.

2) Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange has commercial substance

Buffalo Company exchanged equipment used in its manufacturing operations plus $4,320in cash for similar equipment used in the operations of Carla Company. The following information pertains to the exchange. Buffalo Co. Carla Co. Equipment (cost) $40,320 $40,320 Accumulated depreciation 27.360 14.400 Fair value of equipment 18,000 22,320 Cash given up 4,320