Prepare the necessary journal entry to record asset exchange

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Reference no: EM132592628

Larkspur Corporation exchanged equipment used in its manufacturing operations for equipment used in the operations of Cullumber Ltd. The following information pertains to the exchange:

                                                Larkspur Corp.                     Cullumber Ltd.

Equipment (cost)                    $84,100                            $84,100

Accumulated depreciation           46,600                             40,200

Fair value of old equipment         42,100                              42,900

Cash given up 800

Both companies agreed that the exchange did not have commercial substance.

Question 1: Prepare the necessary journal entries to record the asset exchange on the books of both companies. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Reference no: EM132592628

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