The Corey Company Exchanged Equipment Costing $190,000 with Accumulated Depreciation

question 59

Essay

The Corey Company exchanged equipment costing $190,000 with accumulated depreciation of $45,000 for equipment owned by Salvo Corporation.The Salvo equipment cost $305,000 with accumulated depreciation of $105,000.The fair value of both pieces of equipment was $275,000.
Provide the necessary entries to record the transaction on both companies' books assuming:
(1)The exchange lacks commercial substance.
(2)The exchange has commercial substance.

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