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E10.19B (L0 3) (Nonmonetary Exchange) Mathews Company exchanged equipment used in its manufacturing operations plus $6,000 in cash for similar equipment used in the operations
E10.19B (L0 3) (Nonmonetary Exchange) Mathews Company exchanged equipment used in its manufacturing operations plus $6,000 in cash for similar equipment used in the operations of Biggio Company. The following information pertains to the exchange:
| Mathews Co. | Biggio Co. |
|
|
|
Equipment (cost) | $56,000 | $56,000 |
Accumulated depreciation | 38,000 | 20,000 |
Fair value of equipment | 25,000 | 31,000 |
Cash given up | 6,000 |
|
Instructions
- Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange lacks commercial substance.
- Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange has commercial substance.
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