Wendell Corporation exchanged an old truck and $25,500 cash for a new truck. The old truck had

Question:

Wendell Corporation exchanged an old truck and $25,500 cash for a new truck.

The old truck had a book value of $6,000 (original cost of $25,000 less $19,000 in accumulated depreciation) and a fair value of $7,700.

Required:

1. Prepare the journal entry to record the exchange. Assume the exchange has commercial substance.

2. Prepare the journal entry to record the exchange assuming that the exchange lacks commercial substance.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...