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7A. Smith's Auto, purchased equipment for $28,000. Smith's Auto recorded total depreciation of $19,000 on the equipment. Assume that Smith's Auto exchanged the old equipment for new equipment, paying $5,200 cash. The fair market value of the new equipment is $14,000. Journalize Smith's Auto's exchange of equipment. Assume this exchange has commercial substance.

7A. Smith's Auto, purchased equipment for $28,000. Smith's Auto recorded total depreciation of $19,000 on the equipment. Assume that Smith's Auto exchanged the old equipment for new equipment, paying $5,200 cash. The fair market value of the new equipment is $14,000. Journalize Smith's Auto's exchange of equipment. Assume this exchange has commercial substance.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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7A. Smith's Auto, purchased equipment for $28,000. Smith's Auto recorded total depreciation of $19,000 on the equipment. Assume that Smith's Auto exchanged the old equipment for new equipment, paying $5,200 cash. The fair market value of the new equipment is $14,000. Journalize Smith's Auto's exchange of equipment. Assume this exchange has commercial substance. Let's begin by calculating the gain or loss on the exchange of equipment. (Enter a loss with a minus sign or parentheses.) Market value of assets received Less: Book value of asset exchanged Cash paid Gain or (Loss)
Transcribed Image Text:7A. Smith's Auto, purchased equipment for $28,000. Smith's Auto recorded total depreciation of $19,000 on the equipment. Assume that Smith's Auto exchanged the old equipment for new equipment, paying $5,200 cash. The fair market value of the new equipment is $14,000. Journalize Smith's Auto's exchange of equipment. Assume this exchange has commercial substance. Let's begin by calculating the gain or loss on the exchange of equipment. (Enter a loss with a minus sign or parentheses.) Market value of assets received Less: Book value of asset exchanged Cash paid Gain or (Loss)
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