Wendell Corporation exchanged an old truck and $25,500 cash for a new truck. The old truck had a book value of $6,000 (original cost of $25,000 less $19,000 in accumulated depreciation) and a fair value of $7,700.
Required:
1. Prepare the journal entry to record the exchange. Assume the exchange has commercial substance.
2. Prepare the journal entry to record the exchange assuming that the exchange lacks commercial substance.

Question

Quizplus · Accepted Answer

The Answer of Wendell Corporation exchanged an old truck and $25,500 cash for a new truck. The old truck had a book value of $6,000 (original cost of $25,000 less $19,000 in accumulated depreciation) and a fair value of $7,700.
Required:
1. Prepare the journal entry to record the exchange. Assume the exchange has commercial substance.
2. Prepare the journal entry to record the exchange assuming that the exchange lacks commercial substance.

Wendell Corporation Exchanged an Old Truck and $25,500 Cash for a New