Exchange of Used Assets: Sometimes an asset can be acquired in exchange of an existing used asset. The used asset would be exchanged at a price which may be more or less than the cost of the new asset. Any deficit resulting from the exchange is paid in cash. This exchange may result in a gain or loss on the disposal of the old asset, which should be recorded as part of the transaction. To prepare: To prepare the journal for recording the exchange. (The exchange has commercial substance.)

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Chapter 10, Problem 8BE

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Exchange of Used Assets: Sometimes an asset can be acquired in exchange of an existing used asset. The used asset would be exchanged at a price which may be more or less than the cost of the new asset. Any deficit resulting from the exchange is paid in cash. This exchange may result in a gain or loss on the disposal of the old asset, which should be recorded as part of the transaction.

To prepare: To prepare the journal for recording the exchange. (The exchange has commercial substance.)

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