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	$90,000	$48,000
Accumulated depreciation	51,000	23,000
Fair value	33,000	33,000

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?

Assume the exchange has commercial substance and occurred on April 1. Prepare journal entries for Denver and Bristol to record the exchange. Record Denvers transaction on page 9 and Bristols on page 12.

PAGE 9PAGE 12

GENERAL JOURNAL

Score: 19/101

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3
4

Points:

3.39 / 18

Feedback

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 Denvers transaction on page 9 and Bristols on page 12.

PAGE 9PAGE 12

GENERAL JOURNAL

Score: 0/89

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3
4

Points:

0 / 16