A summary of the process used to account for asset exchange is given below.

Cost of New Asset

The recorded cost of the new asset cannot exceed the fair value of the new asset.

Cash given Fair value of old asset plus cash. Lower of book value of old asset plus cash or fair value of old asset plus cash.
Cash received Fair value of old asset less cash. Lower of allocated book value of old asset or fair value of old asset less cash.

Gain or Loss on Exchange

Cash given Both gains and losses are recognizable; equal to the difference between fair and book values of old asset. Only losses are recognizable; equal to the difference between fair and book values of old asset.
Cash received Both gains and losses are recognizable; equal to the difference between book value of old asset and sum of values received. Gains are recognizable only on the portion considered sold; equal to the difference between allocated book value and cash received.

Losses recognizable in total;
equal to the difference between book value of old asset and sum of cash received and fair value of new asset.

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