Vaughn Company exchanged equipment used in its manufacturing operations plus $4,020 in cash for similar equipment used in the operations of Bramble Company. The following information pertains to the exchange.
Vaughn Co. Bramble Co.
Equipment (cost) $37,520 $37,520
Accumulated depreciation 25,460 13,400
Fair value of equipment 16,750 20,770
Cash given up 4,020
Required:
(a) Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange lacks commercial substance.
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