1 H 1 B D E F G Q2 Mathews Company exchanged equipment used in its manufacturing operations 2 plus $7,800 in cash for similar equipment used in the 3 operations of Biggio Company. The following information pertains to the exchange. 4 Mathews Co. Biggio Co. 5 6 Equipment (cost) $153,000 $146,000 7 Accumulated depreciation $33,000 $17,500 8 Fair value of equipment $135,200 $143,000 9 Cash given up $7,800 10 11 Instructions 12 (a) Prepare the journal entries to record the exchange on the books of both companies. 13 Assume that the exchange lacks commercial substance. 14 Mathewes 15 Book Value Fair Value Gain (Loss) 16 17 Accounts Debit Credit 18 Equipment 19 Acc. Depreciation 20 Equipment (old) 21 Cash 22 23 24 Baiggio 25 Book Value Fair Value Gain (Loss) 26 27 Accounts Debit Credit 28 Cash 29 Acc. Depreciation 30 Equipment (new) 31 Equipment (old) 32 23 4 5 (6) Prepare the journal entries to record the exchange on the books of both companies. 6 Assume that the exchange has commercial substance. 7 8 Book Value Fair Value Gain (Loss) 9 10 Accounts Debit Credit 11 Equipment (new) 32 Acc. Depreciation 43 Equipment (old) 14 Cash 45 Gain on exchange 46 47 Baiggio 48 Book Value Fair Value Gain (Loss) 49 50 Equipment (new) 51 Acc. Depreciation 52 Equipment (old) 53 Cash 54 55 56 57