Answer:
In Robers Company:
Debit Accumulated depreciation $75,000
Debit Equipment $72,500
Debit Cash $10,000
Credit Equipment $145,000
Credit Gain on exchange asset $12,500
In Phifer Corporation
Debit Accumulated depreciation $83,000
Debit Equipment $82,500
Debit Loss on exchange asset $9,500
Credit Cash $10,000
Credit Equipment $165,000
Explanation:
In Robers Company:
Book value of the equipment = $145,000 - $75,000 = $70,000
Fair value of the equipment: $82,500 > Book value
The company will record gain on exchange:
Debit Accumulated depreciation $75,000
Debit Equipment $72,500
Debit Cash $10,000
Credit Equipment $145,000
Credit Gain on exchange asset $12,500
In Phifer Corporation
Book value of the equipment = $165,000 - $83,000 = $82,000
Fair value of the equipment: 72,500 < Book value of the equipment
The company will record loss on exchange:
Debit Accumulated depreciation $83,000
Debit Equipment $82,500
Debit Loss on exchange asset $9,500
Credit Cash $10,000
Credit Equipment $165,000
