Truck Company trades its used delivery trucks for new models at Greenwich GMC. The used trucks have a book value of $60,000 (original cost $140,000 less $80,000 accumulated depreciation). The new trucks have MSRP of $80,000. The fair value of the old trucks based on estimation by third party is $50,000. After some negotiations between the Truck Company and Greenwich GMC, the new trucks would receive $10,000 discount and the trade in value of the old trucks in the amount of $55,000. The remaining portions are to be paid in cash.
Required:
Prepare the journal entries assuming:
a) Commercial substance and
b) No commercial substance.