Briyanne, Inc purchased a computer for $5,000
During 2016 and 2017, the company recorded total depreciation of $4,000 on the computer. On January 1, 2018, the company exchanges the computer for a new one, paying $4,000 cash. The market value of the new computer is $6,000. Prepare the journal entry to record this transaction. Assume the exchange has commercial substance.
What will be an ideal response
Computer Equipment (new) 6,000
Accumulated Depreciation—Computer Equipment 4,000
Gain on Disposal 1,000
Computer Equipment (old) 5,000
Cash 4,000 .Calculation of gain or loss on exchange:
Market value of assets received $6,000
Less:
Book value of asset exchanged $1,000
Cash paid 4,000 (5,000 )
Gain or (Loss) $1,000
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