Homework SourseCaleb Co owns a machine that costs 42800 with accumulated de
Caleb Co. owns a machine that costs $42,800 with accumulated depreciation of $18,600. Caleb exchanges the machine for a newer model that has a market value of $53,000.
1. Record the exchange assuming Caleb paid $30,200 cash and the exchange has commercial substance.
2. Record the exchange assuming Caleb paid $22,200 cash and the exchange has commercial substance.
Solution
Journal entry :
1. Record the exchange assuming Caleb paid $30,200 cash and the exchange has commercial substance.
Journal entry :
2. Record the exchange assuming Caleb paid $22,200 cash and the exchange has commercial substance.
| Date | accounts & explanation | Debit | Credit |
| Accumlated dep (Old) | 18600 | ||
| Machine a/c (New) | 53000 | ||
| Loss on exchange of asset | 1400 | ||
| Machine a/c (Old) | 42800 | ||
| Cash a/c | 30200 | ||
| (To record exchange) | |||
