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…
Scope:NarrowDifficulty:Moderate
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
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)
| Account | Debit | Credit | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
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T-AccountsA visual representation of a ledger account shaped like the letter T. Left side shows debits, right side shows credits.
Equipment (New)Equipment (New)AssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$40,000.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$40,000.00
Accumulated DepreciationAccumulated DepreciationLiabilityAn obligation the business owes to others. Normal balance: credit. Credits increase, debits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$30,000.00
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
Normal bal. ▶
$30,000.00
Equipment (Old)Equipment (Old)AssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$50,000.00
$50,000.00
CashAsset account. Debits increase the balance. Credits decrease the balance.AssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$15,000.00
$15,000.00
Gain on ExchangeGain on ExchangeRevenueIncome earned from business operations. Normal balance: credit. Credits increase, debits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$5,000.00
Normal bal. ▶
$5,000.00