Reporting an Asset Exchange

Clark Co. and Keys Inc. exchange equipment. Information related to this exchange follows.

	Clark Co.	Keys Inc.
Equipment given up:
Equipment (original cost)	$36,000	$42,000
Accumulated depreciation	12,000	14,400
Fair value	21,600	28,800
Cash exchanged	(7,200)	7,200

Required a. Record the exchange for Clark Co. assuming the transaction has commercial substance. b. Record the exchange for Keys Inc. assuming the transaction has commercial substance. c. Record the exchange for Clark Co. assuming the transaction lacks commercial substance. d. Record the exchange for Keys Inc. assuming the transaction lacks commercial substance.

Exchange has Commercial Substance

Exchange Lacks Commercial Substance

a. Record the exchange for Clark Co. assuming the transaction has commercial substance. b. Record the exchange for Keys Inc. assuming the transaction has commercial substance.

	Account Name	Dr.	Cr.
a.			Answer
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b.			Answer
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	To record acquisition of equipment.

c. Record the exchange for Clark Co. assuming the transaction lacks commercial substance. d. Record the exchange for Keys Inc. assuming the transaction lacks commercial substance.

	Account Name	Dr.	Cr.
c.			Answer
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	To record acquisition of equipment.
d.			Answer
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	To record acquisition of equipment.