A. Nonmonetary Exchange Review ProblemArnold Company recently entered into an exchange with Palmer Company. Arnold traded one of its lathes in exchange for a punch press from Palmer Company. The lathe's book value was $80,000 (original cost of $200,000 less $120,000 in accumulated depreciation) and its fair value was $90,000. The book value of the punch press was $110,000 (original cost of $180,000 less $70,000 of accumulated depreciation). The fair value of the punch press was $100,000. Arnold paid $10,000 to complete the exchange, and the exchange has commercial substance.Required:

1. Prepare the journal entry that Arnold would record for the exchange.

2. Prepare the journal entry that Palmer would record for the exchange.