Assume that the following cases are independent and rely on the following data. Make the necessary entries on the books of both companies.
See below for data.
Bakken Co. Farley Co.
Equipmemnt (cost) $540,000 $990,000
Accumulated depriciation 174,000 630,000
Fair market value of equipment 336,000 420,000
Cash received (paid) 84,000 84,000
Case 1: Bakken Co. and Farley Co. traded the above equipment. Assume the transaction has commercial substance.
Case 2: Bakken Co. and Farley Co. traded the above equipment. Assume the transaction lacks commercial substance.