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2. On January 1, 2020, EA Co. bought a new machine. The total original cost of the machine is $255,000. On December 31, 2020,
2. On January 1, 2020, EA Co. bought a new machine. The total original cost of the machine is $255,000. On December 31, 2020, EA Co. wants to disposal the old machine. This old machine had an estimated life of 5 years (straight-line depreciation) and a salvage value of $15,000. The old machine is exchanged for a new machine with a fair value of $142,000. The exchange lacked commercial substance. EA Co. also have to pay $18,000 cash. Please show the gain recognition process from the exchange and prepare the entry for the exchange.
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Intermediate Accounting Volume 1
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy
12th Canadian edition
119-49633-5, 1119496497, 1119496330, 978-1119496496
