Cedric Company recently traded in an older model of equipment for a new model. The old model's book value was $252,000 (original cost of $552,000 less $300,000 in accumulated depreciation) and its fair value was $280,000. Cedric paid $68,000 to complete the exchange which has commercial substance. Required:

Prepare the journal entry to record the exchange. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Question

Adalynn Singleton

Business

20 November, 09:21

Cedric Company recently traded in an older model of equipment for a new model. The old model's book value was $252,000 (original cost of $552,000 less $300,000 in accumulated depreciation) and its fair value was $280,000. Cedric paid $68,000 to complete the exchange which has commercial substance. Required:

Prepare the journal entry to record the exchange. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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Amirah Wheeler · Answer 1

General Journal

Dr Cr

Equipment - new 348,000

Accumulated depreciation 300,000

Cash 68,000

Equipment - old 552,000

Gain 28,000

Workings:

Equipment - new ($280,000 + 68,000) = $348,000

Gain ($280,000 - 252,000) = $28,000