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26 August, 17:47

Splish Corporation traded a used truck (cost $20,800, accumulated depreciation $18,720) for a small computer with a fair value of $3,432. Splish also paid $520 in the transaction. Prepare the journal entry to record the exchange. (The exchange has commercial substance.)

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  1. 26 August, 18:05
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    The journal entry is shown below:

    Computer A/c Dr $3,432

    Accumulated depreciation - Truck A/c Dr $18,720

    To Truck A/c $20,800

    To Gain on disposal of truck $832

    To Cash A/c $520

    (Being the exchange is recorded)

    The computation of the gain on disposal of truck is shown below:

    = Fair value of Computer + accumulated depreciation - purchase value of truck - cash paid

    = $3,432 + $18,720 - $20,800 - $520

    = $832
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