Cannondale Company purchased an electric wax melter on April 30, 2014, by trading in its old gas model and paying the balance in cash. The following data relate to the purchase.

List price of new melter		$39,184
Cash paid		24,800
Cost of old melter (5-year life, $1,736 salvage value)		27,776
Accumulated Depreciation-old melter (straight-line)		15,624
Secondhand fair value of old melter		12,896

Prepare the journal entries necessary to record this exchange, assuming that the exchange (a) has commercial substance, and (b) lacks commercial substance. Cannondales year ends on December 31, and depreciation has been recorded through December 31, 2013

Can you please explain the calculation of each value?

No. Account Titles and Explanation (a) Exchange has commercial substance: Debit Credit Depreciation Expense 1736 Accumulated Depreciati (To record current depreciation.) Accumulated Depreciation- Equipment 1736 17360 Cash 24,800 Equipment Gain on Disposal of Equipm (To record exchange of the machine.)