Q4. Topdog Company exchanged equipment used in its manufacturing operations plus $3,000 in cash for similar equipment used in the operations of Underdog Company. The following information pertains to the exchange.
		Topdog	Underdog
	Equipment (cost)	$40,000	$50,000
	Accumulated depreciation	30,000	30,000
	Fair value of equipment	12,000	15,000
	Cash given up	3,000
Instructions:
a.	Calculate the gain or loss on exchange for each of the two companies.
b.	Prepare the journal entries to record the exchange on the books of both companies when the exchange lacks commercial substance.