Problem:
Equipment that cost $80,000 and has accumulated depreciation of $63,000 is exchanged for similar equipment with a fair value of $35,000 and $15,000 cash is received. The exchange lacked commercial substance.
Directions: Respond to these questions on a separate Excel spreadsheet as directed on the Problem Set 3 directions.
a) Show the calculation of the gain to be recognized from the exchange.
b) Prepare the entry for the exchange.