Question

A computer server system, which had cost $210,000 and had accumulated

depreciation of $147,000, was traded for a new system with a fair market value
of $235,000. The old system and cash of $180,000 were given for the new system.
Prepare the journal entry for the exchange of these similar assets

Answer 1

The cost of the old computer server system was $210000
The depreciation is $147000
The book value of the old system is
$210000 - $147000 = $63000
With the additional cash
$63000 + $180000 = $243000

The new system costs $235000

There is a difference of $10000.

Answer 2

The journal entries for the given above would include the following:
(1) Initial cost: $210,000
(2) depreciation: $147,000
(3) final value of old server: $63,000
(4) cash on hand: $180,000

In fact, the price of the depreciated old system is equal to $63,000 and that the money out of $180,000 will actually mean that the new system was bought for $243,000. This is slightly higher compared to the true price of the new system.