Cain Oil Company owns a piece of equipment, originally costing \($60,000\) that is currently being used on Lease A. Cain Oil Company owns a 40% working interest in Lease A and serves as the operator of the lease. The company plans to use the equipment on a lease wholly owned by Cain Oil Company. The equipment is transferred to the company’s warehouse.

REQUIRED: Prepare the entry to record the transfer under each of the following independent situations assuming severance tax is ignored:

a. The equipment is in Condition B and originally was Condition A when transferred to the property. The current market price is \($80,000.\)

b. The equipment is in Condition C and Cain Oil Company will pay for the reconditioning. The current market price is \($80,000.\)