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Prepare the entry for the exchange

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Reference no: EM132835957

Question - Equipment that cost $388,400 and has accumulated depreciation of $323,900 is exchanged for equipment with a fair value of $160,000 and $40,000 cash is received. The exchange lacked commercial substance.

Required -

(a) Calculate the gain to be recognized from the exchange.

(b) Prepare the entry for the exchange. Show a check of the amount recorded for the new equipment.

Reference no: EM132835957

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