Asset Exchange Calculator

Definition: When exchanging assets, a company trades in an old asset plus cash for a new asset. A gain or loss is recognized based on the difference between th…

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When exchanging assets, a company trades in an old asset plus cash for a new asset. A gain or loss is recognized based on the difference between the fair market value of the new asset received and the total given up (book value of old asset + cash paid).

Asset Exchange Calculator

Cost of Old Asset ($)Accumulated Depreciation ($)Cash Paid ($)Fair Market Value of New Asset ($)

Book Value of Old Asset$20,000.00($50,000.00 − $30,000.00)

Total Given Up$35,000.00($20,000.00 + $15,000.00)

Gain on Exchange$5,000.00($40,000.00 − $35,000.00)

Journal Entry

Account

Debit

Credit

Record exchange of equipment
Equipment (New)	$40,000.00
Accumulated Depreciation	$30,000.00
Equipment (Old)		$50,000.00
Cash		$15,000.00
Gain on Exchange		$5,000.00