Question

On September 3, 2018, the Robers Company exchanged equipment with Phifer Corporation. The facts of the exchange are as follows:

	Robers’ Asset			Phifer’s Asset
Original cost	$	155,000		$	175,000
Accumulated depreciation		83,000			91,000
Fair value		85,500			73,500

To equalize the exchange, Phifer paid Robers $12,000 in cash.

Required:
Record the exchange for both Robers and Phifer. The exchange has commercial substance for both companies. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

	Journal entries
Event	General Journal	DEBIT ($)	CREDIT ($)
1	Cash Account	12,000.00
	Equipment (New) Account	73,500.00
	Accumulated Depreciation (old equipment)	83,000.00
	To Old Equipment		155,000.00
	To Gain on exchange of assets (Balancing Figure)		13,500.00
2	Equipment (New) Account	85,500.00
	Accumulated Depreciation (old equipment)	91,000.00
	Loss on exchange of assets (Balancing Figure)	10,500.00
	To Cash Account		12,000.00
	To Equipment (Old) Account		175,000.00
	Explanation
	Rober's Company
	New equipment ($85,500 – 12,000) = $73,500
	Phyfer's Company
	New equipment ($73,500 + 12,000) = $85,500