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

List price of new freezer $19,090

Cash paid 12,696

Cost of old machine (4-year life, $1,380 salvage value) 16,100

Accumulated depreciationold machine (straight-line) 7,360

Secondhand fair value of old machine 6,164

Prepare the journal entries necessary to record this exchange, assuming that the exchange (a) has commercial substance, and (b) lacks commercial substance.

Teal Mountains fiscal year ends on December 31, and Teal Mountain recorded depreciation on the old machine through September 30, 2017.