3. Santana Company exchanged equipment used in its manufacturing operations plus $2,000 in cash for similar equipment used in the operations of Delaware Company. The following 75 information pertains to the exchange. 76 77 78 79 80 81 82 Instructions: 83 84 85 86 87 88 89 90 91 92 Equipment (cost) Accumulated depreciation Fair value of equipment Cash given up [2] [1] Calculate the gain or loss on exchange for each of the two companies. Santana Dr. Fair value of equipment received Cash received / paid Less: Book value of equipment ($28,000-19,000) ($28,000-10,000) Gain or (Loss) on Exchange 93 94 Case 1: 95 Santana: 96 97 98 99 100 101 102 103 Cr. Santana $28,000 19,000 13,500 2,000 Accounts $15,500 (2,000) (9,000) Amount 4,500 Delaware $28,000 10,000 15,500 Delaware $13,500 2,000 Prepare the journal entries to record the exchange on the books of both companies in each of the following cases. The exchange has commercial substance. (18,000) (2,500)

76 77 78 79 Fair value of equipment 80 Cash given up 3. Santana Company exchanged equipment used in its manufacturing operations plus $2,000 in cash for similar equipment used in the operations of Delaware Company. The following 75 information pertains to the exchange. Equipment (cost) Accumulated depreciation Santana $28,000 Delaware $28,000 19,000 10,000 13,500 15,500 2,000 81 82 Instructions: 83 [1] Calculate the gain or loss on exchange for each of the two companies. 84 85 Fair value of equipment received 86 87 88 89 90 Cash received / paid Less: Book value of equipment ($28,000-19,000) ($28,000-10,000) Gain or (Loss) on Exchange Santana $15,500 (2,000) Delaware $13,500 2,000 (9,000) (18,000) 4,500 (2,500) 91 92 [2] 93 94 Case 1: Prepare the journal entries to record the exchange on the books of both companies in each of the following cases. The exchange has commercial substance. 95 Santana: 96 Accounts Amount 97 Dr. 98 99 100 Cr. 101 102 103