Brief Exercise 10-8 Crane Corporation traded a used truck (cost $23,200, accumul

Question

Brief Exercise 10-8

Crane Corporation traded a used truck (cost $23,200, accumulated depreciation $20,880) for a small computer with a fair value of $3,828. Crane also paid $580 in the transaction.

Prepare the journal entry to record the exchange. (The exchange has commercial substance.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

Account Titles and Explanation

Debit

Credit

Explanation / Answer

Note: Book value and accumulated depreciation of existing truck which is being traded is reversed and new asset is debited. The difference after considering cash payment is profit as the debits are more than credits.

Account titles and explanation Debit Credit Computer $ 3,828 Accumulated Depreciation $ 20,880 Truck $ 23,200 Cash $ 580 Profit on Exchange $ 928 ( Exchange of asset recorded and profit on exchange recognized)

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