Example - Nonmonetary exchange Delco Corporation traded in a machine for a newer model. The old machine had a book value of $50,000 (original cost $80,000) and its fair value was $90,000. Delco paid $10,000 to complete the exchange. The exchange lacks commercial substance. Required: Prepare the journal entry for this transaction. GL Account Debit Credit Note: When the exchange lacks commercial substance no gain is recognized. However remember losses are recognized immediately