Assignment task: On November 1, Einstein Corp. purchased new machinery by transferring $150,000 cash along with old machinery which has a book value of $100,000 (a cost of $250,000 less accumulated depreciation of $150,000) and a fair market value of $60,000 over to the seller. Directions: On your scrap paper, prepare the journal entry to record this exchange assuming it has commercial substance. Next, answer the two questions below.
Question #1: What should be the capitalized cost of the new machinery when Einstein records the transaction? Do not include symbols, decimals, or cents in your numerical responses.
Question #2: In the entry to record this exchange from Einstein's perspective, how much gain or loss should be recognized? Note: There are two spaces to complete below.