Business, 11.02.2021 20:50 jaaiphieaslade

Indigo Company exchanged equipment used in its manufacturing operations plus $3,960 in cash for similar equipment used in the operations of Sweet Company. The following information pertains to the exchange. Indigo Co. Sweet Co.
Equipment (cost) $36,960 $36,960
Accumulated depreciation 25,080 13,200
Fair value of equipment 16,500 20,460
Cash given up 3,960

Required:
a. Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange lacks commercial substance.
b. Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange has commercial substance.

Answers: 2

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Indigo Company exchanged equipment used in its manufacturing operations plus $3,960 in cash for simi...

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