Green Co. had a chainsaw that cost $120,000 on January 5 2010. This old chainsaw had an estimated life of ten years and salvage value of $20,000. On April 3, 2015, the old chainsaw with a fair value of $60,000 is exchanged for a new chainsaw. The exchange lacked commercial substance. Assume that the last fiscal period ended on December 31,2014, and that straight-line depreciation is used. 1)Calculate the amount of gain or loss to be recognized by Green Co. 2)Prepare all entries that are necessary on April 3, 2015.
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Green Co. had a chainsaw that cost $120,000 on January 5 2010. This old chainsaw had an estimated life of ten years and salvage value of $20,000.
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