A Corporation recently entered into an exchange to acquire new equipment to be used in its manufacturing
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Question:
A Corporation recently entered into an exchange to acquire new equipment to be used in its manufacturing process. The new equipment had a fair value of $200,000. In exchange for the new equipment, Corporation traded in existing equipment that had an original cost of $300,000, and accumulated depreciation of $240,000, plus paid cash of $125,000. Record the journal entry for this exchange assuming that the exchange:
a. Has commercial substance Lacks commercial substance
b. Lacks commercial substance
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