II. Nonmonetary Exchange Farley Company exchanged equipment used in its manufacturing operations plus $16,000 in cash for similar equipment used in the operations of Clarke Company. The following information pertains to the exchange. Equipment (Cost) Accumulated Depreciation Fair Value of Equipment Cash Given Up Cash Received Farley $224,000 152,000 108,000 16,000 Clarke $224,000 120,000 124,000 16,000 Instructions: Assume that the exchange lacks commercial substance. Prepare the journal entries to record the exchange on the books of both companies. (b) Assume that the exchange has commercial substance. Prepare the journal entries to record the exchange on the books of both companies