Two independent companies, Denver and Bristol, each own a warehouse, and they agree to an exchange in which no cash changes hands. The following information for the two warehouses is available:

Denver

Bristol

Cost $$80,000$ $$30,500$

Accumulated depreciation $58,00023,000$ Assume the exchange does not have commercial substance and occurred on April $1.$ Prepare journal entries for Denver and Bristol to record the exchange. Record Denver$$s transaction on page $9$ and Bristol$$s on page $12.$

All transactions on this page must be entered $($except for post ref$($s$))$ before you will receive Check My Work feedback.

Fair value $18,50018,500$

Required:

$1.$ Assuming the exchange has commercial substance, prepare journal entries for Denver and Bristol to record the exchange.

$2.$ Assuming the exchange does not have commercial substance, prepare journal entries for Denver and Bristol to record the exchange.

$3.$ Next Level What is the justification of accounting for the exchange differently when the exchange has commercial substance versus when it does not?