(Nonmonetary Exchanges)
Cannondlae Company purchased an electric wax melter on April 30,2008, by trading in its old gas model and paying the balance in cash. The following data relate to the purchase.
List price of new melter............................................. ..15,800
Cash paid ............................................................ ...10,000
Cost of old melter (5 years life 700 residual value)............ ....11,200
Accumulated depreciation old melter (straight line)................ 6,300
Second hand market value market of old melter............... ... 5,200
Instructions:
Prepare the journal entry(ies) necessary to record this exchange, assuming that the exchange (a) has commercial substance, and (b) lacks commercial substance. Cannondale's fiscal year ends on December 31, and depreciation has been recorded through December 31, 2007.