Q$2$ Mathews Company exchanged equipment used in its manufacturing operations

plus $$10,500$ 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$)$

$$153,000$

$$146,000$

Accumulated depreciation

Fair value of equipment

$$32,000$

$$17,600$

$$132,500$

$$143,000$

Cash given up

$$10,500$

Instructions

$($a$)$ Prepare the journal entries to record the exchange on the books of both companies.

Assume that the exchange lacks commercial substance.

Mathewes

Book Value

Fair Value

Gain $($Loss$)$

Baiggio

Book Value

Fair Value

Gain $($Loss$)$

$($b$)$ Prepare the journal entries to record the exchange on the books of both companies.

Assume that the exchange has commercial substance.

Book Value

Fair Value

Gain $($Loss$)$

Baiggio

Book Value

Fair Value

Gain $($Loss$)$