Santana Co.

$28,000 Equipment (cost)

19,000 Accumulated depreciation

14,000 Fair value of equipment

1,000 Cash given up

Delaware Co.

$18,000 Equipment (cost)

10,000 Accumulated depreciation

15,000 Fair value of equipment

a) Prepare the journal entries to record the exchange on the book of Delaware Co. Assume that the exchange has commercial substance.

b) Prepare the journal entries to record the exchange on the book of Delaware Co. Assume that the exchange lacks commercial substance.