Question

Botella's Taxi Company exchanged a fleet of Toyota vehicles for an equal-sized fleet of Nissan vehicles from the Sentry Transportation Group. (Click the icon to view additional information.) Prepare the jounal entry to record the exchange transaction for Botella's Taxi Company. (Record debits first, then credits. Exclude explanations from More Info The carrying value and fair value of each fleet of vehicles on the date of the exchange are as follows: Accumulated Carrying Fair Asset Cost Depreciation Value Value Toyota fleet (Asset Given Up) $ 1,091,000$ 513,000 $ 578,000$ 796,000 Nissan fleet (Asset Received) $ 960,000 $ 297,000 $ 663,000 $ 676,600 Botella's Taxi received cash of $119,400 and the Nissan fleet in exchange for the Toyota fleet. Botella's Taxi does not expect the future cash flows to change significantly as a result of this exchange and, therefore, the transaction lacks commercial substance. Print Done

Answer 1

As per IAS 16, if the assets exchanged lack commercial substance, then they are not recorded art fair value
Carrying amount of toyota fleet = 5,78,000
Journal Entry
	Cash a/c Dr		119,400
	Niissan fleet a/c Dr		458,600
	To Toyota fleet a/c			578,000
	(Being exchange of assets recorded)
The carrying amount or fair value of asset taken is not considered