On 11/30/15 Cougar Corp. exchanged an old truck for a piece of equipment and cash.The truck was purchased on 11/1/10 for $20,000 and was depreciated using the straight-line depreciation method based on the following assumptions: 

a) residual value of $5,600, 

b) the useful life of 6 years. 

As compensation for the truck, Cougar Corp received a piece of equipment with a fair value of $7,500 and $1,000 cash.

1. Record the journal entry for the exchange assuming the transaction DOES have commercial substance.

2. Record the journal entry for the exchange assuming the transaction DOES NOT have commercial substance. Round all amounts to the nearest dollar.

Answer rating: 100% (QA)

1 Assuming the transaction DOES have commercial substance the journal entry to record the exchange w... View the full answer