On January 2, 2010, ABC Co. purchased a work truck for $45,000 cash. The truck had an estimated useful life of 7 years and an estimated salvage value of $3,000. The straight-line method of depreciation was used. Prepare the journal entries to record depreciation expense and the disposition of the truck on September 1, 2014 accumulated depreciation was $28,000 under each of the following assumptions:

A. The truck and $45,000 cash was given in exchange for a new work truck that had a cash price of $60,000. This transaction has commercial substance.

B. The truck and $40,000 were exchanged for a new work truck that had a cash price of $60,000. This transaction lacks commercial substance.