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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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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