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Madison & Gallatin Companies exchanged assets during the year. Assume that the following cases are...

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Accounting

Madison & Gallatin Companies exchanged assets during the year. Assume that the following cases are independent and rely on the following data.

Madison Co. Gallatin Co.

Equipment (cost) $3,000,000 $2,700,000

Accumulated depreciation 1,400,000 1,600,000

Fair value of equipment 1,200,000

Cash paid 300,000

Cash received 300,000

A. Assuming the exchange has commercial substance, record the exchange on Gallatins Books.

Gallatins Books:

Accounts Debit Credit

B. Assuming the exchange does not have commercial substance, record the exchange for Madison.

Madisons Books:

Accounts Debit Credit

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