Accounting in acquisition and disposition of property, plant and Equipment

1. Paxten Company decides to exchange a machine used in its operations for a machine owned by Dorsett Company. Dorsett exchanged a machine plus $10,000 to Paxten Company. Dorsett Company's machine had a cost of $120,000 and accumulated depreciation of $45,000. Paxten Company's machine had a cost of $160,000 and accumulated depreciation of $70,000. The fair market value of Paxten Company's machine is $92,000. REQUIREMENT: RECORD THE ENTRY MADE BY PAXTEN COMPANY ONLY, ASSUMING THIS IS A COMMERCIAL SUBSTANCE EXCHANGE. 2. IN REGARD TO QUESTION #1, SHOW HOW YOU COMPUTED THE GAIN OR LOSS FOR THE MACHINE THAT PAXTEN COMPANY EXCHANGED. 3. IN REGARD TO QUESTION #1, WHAT MUST HAVE BEEN THE APPROXIMATE FAIR VALUE OF THE MACHINERY THAT DORSETT COMPANY EXCHANGED? 4. ASSUMING THE EXCHANGE IN QUESTION #1 IS A NOT A COMMERCIAL SUBSTANCE EXCHANGE, RECORD THE JOURNAL ENTRY THAT PAXTEN COMPANY WOULD PREPARE 5. EXPLAIN THE EFFECTS OF THE FOLLOWING ERROR ON THE BALANCE SHEET AND THE INCOME STATEMENT IN THE CURRENT YEAR AND THE SUCCEEDING YEARS