Brooks LLC exchanged machinery with an appraised value of $4,600,000, a recorded cost of $7,200,000 and accumulated depreciation of $3,600,000 with Steel Inc for machinery Steel owns. The machinery has an appraised value of $4,520,000, a recorded cost of $8,672,000, and accumulated depreciation of $4,752,000. Steel also gave Brooks $160,000 in the exchange. Assume depreciation has already been updated.   Instructions (A) Prepare the entry on Brooks books if the exchange had commercial substance.  Show Gain/Loss computations. (b)        Prepare the Steel’s books if the exchange lacked commercial substance. Show Gain/Loss computations.

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A:

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