Richards, Inc. exchanged a piece of equipment with an original cost of $82,000, accumulated depreciation to date of $40,000, and a fair value of $46,000 for a similar piece of equipment. Cash flows are not expected to change significantly. The newly acquired equipment had a book value of $40,000 and a fair market value of $46,000. Richard should record the equipment acquired at

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Richards, Inc. exchanged a piece of equipment with a book value of $42,000 ($82,000 cost - $40,000 accumulated depreciation) for a similar piece of equipment with a fair market value of $46,000. Since the cash flows are not expected to change significantly, the exchange is considered to have commercial substance. Therefore, Richards should record the newly acquired equipment at its fair market value of $46,000.