Sage Hill Inc. purchased a commercial grade soft-serve ice cream machine on September 30, 2017. Sage Hill traded in its existing machine and paid cash in the transaction. The details of the transaction are as follows:

List price of new freezer $21,995

Cash paid 14,628

Cost of old machine (4-year life, $1,590 salvage value) 18,550

Accumulated depreciationold machine (straight-line) 8,480

Secondhand fair value of old machine 7,102

Prepare the journal entries necessary to record this exchange, assuming that the exchange (a) has commercial substance, and (b) lacks commercial substance. Sage Hills fiscal year ends on December 31, and Sage Hill recorded depreciation on the old machine through September 30, 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Debit Credit No. Account Titles and Explanation (a) Exchange has commercial substance: (To record current depreciation) (To record exchange of the machine) (b) Exchange lacks commercial substance: (To record current depreciation) (To record exchange of the machine)