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 $3,480in cash for similar equipment used in the operations of Carla Company. The following information pertains to the exchange. Buffalo Co. Carla Co. $32,480 $32,480 Equipment (cost) Accumulated depreciation 22,040 11,600 Fair value of equipment 14,500 17,980 Cash given up 3,480