Dark Room Corp purchased equipment for $45,000
Total depreciation of $36,000 was recorded. On January 1, 2017, Dark Room exchanged the equipment for new equipment, paying $65,000 cash. The market value of the new equipment is $65,000. Prepare the journal entry to record this transaction. Assume the exchange had commercial substance.
What will be an ideal response
Equipment (new) 65,000
Accumulated Depreciation—Equipment 36,000
Loss on Disposal 9,000
Equipment (old) 45,000
Cash 65,000 .Calculation of gain or loss on exchange:
Market value of assets received $65,000
Less:
Book value of asset exchanged $9,000
Cash paid 65,000 (74,000 )
Gain or (Loss) $(9,000 )
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