[Bsmithcpa]

Having trouble finding a clear answer to this in Becker (mainly because all of Becker’s examples have boot):

-Exchange lacks commercial substance
-Company exchanged old truck for a new truck
-Old Truck was bought on Jan 1st, Year 2 for 72,000
-Old Truck has a 4 year life and no salvage value, depreciated straight-line
-Exchange occurred on April 1, Year 5
-Depreciation is calculated annually at year-end
-New Truck had a CV:40k, FV: 35K
-No Boot

Record the JE for depreciation on April 1, Year 5

Record the JE for the exchange

Thanks!

[AndreA]

May be I'm wrong, but I believe this is the answer

1) 72,000/4y * 3 months
Dr: Depr exp 4,500
Cr: Accum Depr 4,500

2) Dr: New Truck 35,000
Dr: Accum. Depr 59,400 (72,000/4*3.3)
Cr: Old truck 72,00
Cr: Gain 22,400

[Author]

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