Flounder Limited owns 90% of Pharoah Inc. During 2020, Flounder acquired a machine from Pharoah in exchange for its own used machine. Both companies are in the tool-making business. The agreed exchange amount is $2,050, although the transaction is nonmonetary. Pharoah has an original cost of $6,000 and carries its machine on its books at a carrying amount of $1,640, whereas Flounder has an original cost of $7,000 and carries its machine on its books at a carrying amount of $1,910. Neither company has a balance in the Contributed Surplus account relating to previous related-party transactions. Both Flounder and Pharoah follow ASPE. Using the related-party decision tree and answer the following.

Prepare the journal entries to record the exchange for both Flounder and Pharoah under the assumption that the transaction is not in the normal course of operations for either company, and the transaction has commercial substance. ( Each entry has 4 lines/ accounts).

Prepare the journal entries to record the exchange for both Flounder and Pharoah under the assumption that the transaction is not in the normal course of operations for either company, and the transaction does not have commercial substance. ( Each entry has 4 lines/ accounts).

Prepare the journal entries to record the exchange for both Flounder and Pharoah under the assumption that the transaction is in the normal course of operations for each company, and the transaction has commercial substance. ( Each entry has 4 lines/ accounts).

Prepare the journal entries to record the exchange for both Flounder and Pharoah under the assumption that the transaction is in the normal course of operations for each company, and the transaction does not have commercial substance. ( Each entry has 4 lines/ accounts).