Montgomery Ltd. purchased an electric wax melter on April 30, 2023, by

Montgomery Ltd. purchased an electric wax melter on April 30, 2023, 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
Fair value of old melter ............................................................... 5,200


Instructions

Prepare the journal entry or entries necessary to record this exchange, assuming that the exchange 

(a) Has commercial substance, 

(b) Lacks commercial substance. 

Montgomery’s year ends on December 31, and depreciation has been recorded through December 31, 2022.