Partner Bank recently traded in office fixtures. Here are the facts:
Old fixtures: __________________________________ New fixtures:
Cost, $91,000 Cash paid, ....................................... $110,000
Accumulated depreciation, $68,000 Market value, ......... $133,000
Requirements
1. Record Partner Bank's trade-in of old fixtures for new ones. Assume the exchange had commercial substance.
2. Now let's change one fact. Partner Bank feels compelled to do business with Elm Furniture, a bank customer, even though the bank can get the fixtures elsewhere at a better price. Partner Bank is aware that the new fixtures' market value is only $126,000.
Record the trade-in. Assume the exchange had commercial substance.