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On the first day of the fiscal year, a new walk-in cooler with a list price of $58,000 was acquired in exchange for an old cooler and $44,000 cash. The old cooler had a cost of $25,000 and accumulated depreciation of $16,000.
Assume the transaction has commercial substance.
a) Determine the gain to be recorded on the exchange.
b)Journalize the entry to record the exchange.
Unrealized Increase/Decrease
Change in the market value of assets that have not been sold, impacting a company's financial statements in terms of valuation but not cash flow.
Market Value
The existing value at which an asset or service might be traded in a commercial environment.
Available-For-Sale
A classification of financial assets indicating that they are not held for trading or long-term investment purposes, and their value can be adjusted based on market valuations.
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