Cedric Company recently traded in an older model computer for a new model. The o

Question

Cedric Company recently traded in an older model computer for a new model. The old model’s book value was $180,000 (original cost of $400,000 less $220,000 in accumulated depreciation) and its fair value of the old equipment is $170,000. Cedric paid $60,000 to complete the exchange which has commercial substance.

Required: Prepare the journal entry to record the exchange. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

*Please provide with step by step calculation.

Thanks,

Explanation / Answer

Date Account Titles Debit Credit $ $ Computer ( New) 170,000 Accumulated depreciation 220,000 Loss on exchange of computer 70,000 Computer (Old) 400,000 Cash 60,000 To record exchange of old computer with new computer.

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