Crane Company Inc. gave a piece of equipment to Sarasota Inc. in exchange for a new machine and $5,000. The exchange lacks commercial substance.

Equipment:

Historical Cost = $70,000

Accumulated Depreciation = $40,000

Fair Market Value = $35,000

Machine:

Historical Cost = $50,000

Accumulated Depreciation = $35,000

Fair Market Value = $40,000

Instructions:

(1.) Prepare Crane Company Inc.'s journal entry to record exchange transaction.

(2.) Prepare Sarasota Inc.'s journal entry to record exchange transaction.