Two independent comparies, Derver and Bistol, each own a warehouse, and they agree to an exchange in which no cash charges hands. The following information for the fwo warehouses is avalable: Aequired: 1. Assuming the exchange has commerelal substance, prepare joumal enties for Demver and Bnisfol to record the exchange. 2. Assuming the exchange does not have commercial substance, prepare joumal entries for Denver and blistol to record the exchange: 3. Next Level What as the justicasion of accoounsing for the exchange diferenty when the exchange has contamercial substance versus when it does not? 1. Assume the exchange has commercial substance and occurred on April 1. Prepare journal entries for Denver and Birstol to rocord the exchange. 2. Assume the exchange does not have commercial substance and occured on Apnit 1. Prepare joumal entries for Denver and Bristol to record the exchange. 3. What is the lustification of accounting for the exchange diflerenfiy when the exchange has commercial substance vwsus when if does nor? The company's Ature cash flows are expected to When an exchange has commercial substance, the economic position of the two comparies at the time of the exchange. If the exchange does not have commercial substarce as a result of the exchange and gains and losses are and results in a gain, GAAP requires the gain to be deterred by the cost of the new asset. GMAP imposes this requirement to provent comparies from structuring transactions to exchange economicaly equivalent assets simply in order to book a gain in income