Prepare the entries on both companies books

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Question - ABC Co. exchanged machinery with an appraised value of $2,200,000, a recorded cost of $3,068,000 and accumulated depreciation of $1,085,000, for machinery that EFG Inc. owns. EFG's machinery has an appraised value of $1,350,000, a recorded cost of $2,569,000, and accumulated depreciation of $1,856,000. EFG also gave ABC $46,000 in the exchange. Assume depreciation has been updated to the date of exchange.

Required -

1. Prepare the entries on both companies' books assuming that the transaction has commercial substance.

2. Prepare the entries on both companies' books assuming that the transaction lacks commercial substance.

Reference no: EM132826555

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