Question

Wall Corp. exchanges equipment in a transaction that has commercial substance. The original cost of the asset surrendered was 100,000, and its accumulated depreciation at the date of exchange was60,000. The asset received had a fair value of 80,000 and a book value of65,000. The entry to record the transaction includes (Select all that apply.)

1) a credit to equipment-old for $100,000.
2) a credit to equipment-old for $80,000.
3) a credit to accumulated depreciation for $60,000.
4) a credit to gain on exchange of asset for $40,000.
5) a debit to equipment-new for $80,000.
6) a debit to accumulated depreciation for $60,000.
7) a debit to equipment-new for $65,000.

Answer 1

The entry to record the transaction includes a credit to equipment-old for $100,000, a credit to accumulated depreciation for $60,000, a debit to equipment-new for $80,000, and a debit to accumulated depreciation for $60,000.

Step-by-step explanation:

The entry to record the transaction includes a credit to equipment-old for $100,000, a credit to accumulated depreciation for $60,000, a debit to equipment-new for $80,000, and a debit to accumulated depreciation for $60,000.