Pipa Incorporated entered into an arrangement with Gianardo Ltd. to exchange equipment and cash. Pipa gave up a piece of equipment that was no longer being used by the business, as well as $11,500 in cash. The equipment had a net book value of $38,000 (cost $170,000) and a fair value of $55,000. Gianardo is able to use the equipment in its manufacturing facility. In exchange for the equipment, Gianardo has provided Pipa with a new truck. The truck’s fair value is estimated to be between $62,000 and $80,000, and it has a net book value of $64,000 (cost $109,000).

Required:

1. Prepare the journal entries to show how Pipa would record this transaction assuming there was commercial substance.

2. Prepare the journal entries to show how Pipa would record this transaction assuming there is no commercial substance.

3. Prepare the journal entries showing how Gianardo would record this transaction assuming there was commercial substance.

4. Prepare the journal entries showing how Gianardo would record this transaction assuming there is no commercial substance.