EXERCISE 2.

1 DEBIT CREDIT
1 Computer 430,000
Inventory (car) 300,000
Cash 50,000
Gain on exchange 80,000

2 Machinery-new(110k+30k) 140,000
Accumulated depreciation 120,000
Loss on exchange 10,000
Machinery-old 240,000
Cash 30,000

Fair value of asset given

Carrying amount
Loss on exchange

3 Equipment-new 1,000,000
Loss on exchange 200,000
Accumulated depreciation 1,800,000
Equipment-old 3,000,000

EXERCISE 2.2

SMILE

Equipment-new 500,000
Accumulated depreciation 2,000,000
Equipment-old 2,400,000
Gain on exchange 100,000
110,000
120,000
-10,000

FROWN

Equipment-new 500,000
Accumulated depreciation 1,750,000
Equipment-old
Gain on exchange
2,200,000
50,000