Ayayai Limited owns 90% of Blossom Inc. During 2023, Ayayai acquired a machine from Blossom in exchange for its own used

machine. Both companies are in the tool-making business. The agreed exchange amount is $1,100, although the transaction is

nonmonetary. Blossom has an original cost of $6,000 and carries its machine on its books at a carrying amount of $790, whereas

Ayayai has an original cost of $7,000 and carries its machine on its books at a carrying amount of $990. Neither company has a balance

in the Contributed Surplus account relating to previous related-party transactions. Both Ayayai and Blossom follow ASPE.

Using the related party decision tree and answer the following.

(a)

Prepare the journal entries to record the exchange for both Ayayai and Blossom under the assumption that the transaction is not

in the normal course of operations for either company, and the transaction has commercial substance.

Blossom Inc: Account Titles and Explanation Debit Credit Accumulated Depreciation-Machinery Contributed Surplus Gain on Disposal of Machinery Loss on Disposal of Machinery Machinery (New) Machinery (Old) No Entry Retained Earnings