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

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

Carla Company exchanged equipment used in its manufacturing operations plus $3,660 in cash for similar equipment used in the operations of Sarasota Company. The following information pertains to the exchange. Carla Co. Sarasota Co. Equipment (cost) Accumulated depreciation Fair value of equipment Cash given up $34,160 23,180 15,250 3,660 $34,160 12,200 18,910