Non-monetary exchange
Athens Inc. exchanged machinery with an appraised value of $ 1,170,000, a recorded cost of $ 1,800,000 and accumulated depreciation of $ 900,000, for machinery that Sparta Corp. owns. Sparta’s machinery has an appraised value of $ 1,140,000, a recorded cost of $ 2,160,000, and accumulated depreciation of $ 1,188,000. Sparta also gave Athens $ 30,000 in the exchange. Assume depreciation has been updated to the date of exchange.
Instructions
a)Prepare the entries on both companies’ books assuming that the transaction has commercial substance.
b)Prepare the entries on both companies’ books assuming that the transaction lacks commercial substance.

Question

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The Answer of Non-monetary exchange
Athens Inc. exchanged machinery with an appraised value of $ 1,170,000, a recorded cost of $ 1,800,000 and accumulated depreciation of $ 900,000, for machinery that Sparta Corp. owns. Sparta’s machinery has an appraised value of $ 1,140,000, a recorded cost of $ 2,160,000, and accumulated depreciation of $ 1,188,000. Sparta also gave Athens $ 30,000 in the exchange. Assume depreciation has been updated to the date of exchange.
Instructions
a)Prepare the entries on both companies’ books assuming that the transaction has commercial substance.
b)Prepare the entries on both companies’ books assuming that the transaction lacks commercial substance.

Non-Monetary Exchange Athens Inc. Exchanged Machinery with an Appraised Value of