g Sheridan Company received $135000 in cash and a used computer with a fair value of $318000 from Carla Vista Co. for Sheridan Company's existing computer having a fair value of $453000 and an undepreciated cost of $420300 recorded on its books. The transaction has no commercial substance. How much gain should Sheridan recognize on this exchange, and at what amount should the acquired computer be recorded, respectively

How much gain should Sheridan recognize on this exchange,

and at what amount should the acquired computer be recorded, respectively

Explanation:

Since the cash received ($135,000) represents more than 25% of the asset exchange, this transaction must be recorded as a cash sales.

Journal entry to record the transaction:

Dr Cash 135,000

Dr Computer, new 318,000

Dr Accumulated depreciation - computer, old 32,700

    Cr Computer, old 453,000

    Cr Gain on asset exchange 32,700

engaging in financial planning?

just took my test

answer; functional fixedness;