Nonmonetary Exchange Montgomery Company purchased an electric wax melter on April 30, 2011, 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-year life, $700 residual value)           12,700

Accumulated depreciation—old melter (straight-line)         7,200

Second-hand market value of old melter                               5,200

Prepare the journal entry (ies) necessary to record this exchange, assuming that the exchange

(a) Has commercial substance, and

(b) Lacks commercial substance. Montgomery’s year ends on December 31, and depreciation has been recorded through December 31, 2010.