Evan and Tony companies exchanged machinery with the following:

Evans Machine Tonys Machine

Fair value $1,395,000 $1,455,000

Recorded cost 2,700,000 3,240,000

Accumulated depreciation 1,350,000 1,782,000

Cash paid 60,000

Cash received 60,000

Instructions

(a) Prepare the entriy(ies) on Tonys books assuming that the exchange lacked commercial substance.

(b) Prepare the entry(ies) on Evans books assuming that the exchange had commercial substance.