Question 1 (2.5 marks): Spiderman Company exchanged machinery with market value of $1,755,000, a recorded cost of $2,700,000 and Accumulated Depreciation of $1,350,000 with Lacey Corporation for machinery Lacey owns. The machinery has market value of $1,695,000, a recorded cost of $3,240,000, and Accumulated Depreciation of $1,782,000. Lacey also gave Spiderman $60,000 in the exchange. Assume depreciation has already been updated.Instructions

(a) Prepare the entries on both companies' books assuming that the exchange has commercial substance. (Round all computations to the nearest dollar)

(b) Prepare the entries on both companies' books assuming that the exchange lackscommercial substance. (Round all computations to the nearest dollar)

(c) What is commercial substance? What can you conclude about the gain or l oss from Part a and P art b?