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Prepare the journal entries to record the exchange on books

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Reference no: EM132525213

Question - Dunc Surf Limited exchanged equipment that it uses in its manufacturing operations for similar equipment that is used in the operations of Xander Limited. Dunc Surf also paid Xander $3,100 in cash. The following information pertains to the exchange.

 

Dunc Surf

Xander

Equipment (cost)

$57,000

$61,500

Accumulated depreciation

$31,250

$20,000

Fair value of equipment

$27,500

$30,600

Required -

1. Prepare the journal entries to record the exchange on the books of both companies, assuming the exchange is determined to have commercial substance.

2. Prepare the journal entries to record the exchange on the books of both companies, assuming the exchange is determined not to have commercial substance.

Reference no: EM132525213

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