Jones Corp. purchased equipment for $45,000. Total depreciation of $36,000 was recorded. On January 1, 2017, Jones exchanged the equipment for new equipment, paying $56,000 cash. The market value of the new equipment is $65,000. Prepare the journal entry to record this transaction. Assume the exchange has commercial substance.
Equipment (new) xx
Accumulated Depreciation—Equipment xx
Equipment (old) xx
Cash xx
Explanation: Calculation of gain or loss on exchange:
Market value of assets received xx
Less:
Book value of asset exchanged xx
Cash paid xx (xx)
Gain or (Loss) $xx