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30 January, 10:44

Krasel Corporation exchanges old equipment for new equipment. The original cost of the old equipment was $90,000, and its accumulated depreciation at the date of exchange was $70,000. The new asset received had a fair value of $50,000 and a book value of $45,000. The journal entry to record this exchange will include which of the following entries?

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Answers (2)
  1. 30 January, 12:42
    0
    The complete journal entry should be:

    Dr Equipment account 50,000

    Dr Accumulated Depreciation account 70,000

    Cr Gain on Exchange of Asset account 30,000

    Cr Equipment account 90,000

    Explanation:

    The new equipment must be recorded at fair market value ($50,000) which results in a net gain = $50,000 - ($90,000 - $70,000) = $30,000
  2. 30 January, 13:16
    0
    Credit equipment $90,000

    Debit accumulated depreciation $70,000
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