AK Corporation recently acquired new equipment to be used in its production process. In exchange, the company traded an existing machine that had an original cost of $60,000. The fair value of the old equipment is $17,000 even though the current book value is $15,000. In addition, AK paid $40,000 cash to the equipment manufacturer.

Record the transaction assuming the exchange has commercial substance

Record the transaction assuming the fair value of the equipment is $10,000.