Why gold will use newly acquired machine in same manner

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Reference no: EM13488348

On August 1, Gold Company exchanged a machine for a similar machine owned by Cowboy Company and also received $7,000 cash from Cowboy Company.Gold's machine had an original cost of $70,000, accumulated depreciation to date of $34,500, and a fair market value of $60,000. Cowboy's machine had a book value of $45,000 and a fair value of $53,000.

Required:

Prepare the necessary journal entry by Gold Company to record this transaction assuming

a. Gold will use the newly acquired machine in the same manner as the old one.
b. Gold's use of the new machine will be substantially different from the old one.

 

Reference no: EM13488348

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