Asset exchange – no commercial substance
Turkey Corp. has a computer that they purchased on March 30, 2016, for $ 106,000. This computer had an estimated life of ten years and a residual value of $ 6,000. On December 31, 2020, the old computer is exchanged for a similar computer with a fair value of $ 58,000. Turkey also received $ 2,000 cash. Assume that the last fiscal period ended on December 31, 2019, and that straight-line depreciation is used.
Instructions
Prepare all entries that are necessary on December 31, 2020.

Question

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The Answer of Asset exchange – no commercial substance
Turkey Corp. has a computer that they purchased on March 30, 2016, for $ 106,000. This computer had an estimated life of ten years and a residual value of $ 6,000. On December 31, 2020, the old computer is exchanged for a similar computer with a fair value of $ 58,000. Turkey also received $ 2,000 cash. Assume that the last fiscal period ended on December 31, 2019, and that straight-line depreciation is used.
Instructions
Prepare all entries that are necessary on December 31, 2020.

Asset Exchange – No Commercial Substance