United Group purchases a new piece of machinery at a price of $20,000 plus trade-in, fo.b. factory. United paid $10,000 cash and traded in used machine. The used machine had originaly cost $70,000; it had a book value of $50,000 and a second-hand fair value of $55,000, as indicated by recent transactions involving similar machine Freight and installation charges for the new equipment required a cash payment of $2,000. Required:

(a) Under the assumption of that the exchange has commercial substance, prepare the general jourmal entry to record this transaction. (7 marks)

(b) Assuming the same facts asin (a) except that fair value information for the assets exchange is not determinable, prepare the general journal entry to record this transaction.