Pearl Corporation exchanged equipment used in its manufacturing operations for equipment used in the operations of Martinez Ltd. The following information pertains to the exchange:

		Pearl Corp.			Martinez Ltd.
Equipment (cost)		$84,700			$84,700
Accumulated depreciation		46,700			40,200
Fair value of old equipment		41,900			43,500
Cash given up		1,600

Both companies agreed that the exchange did not have commercial substance. Prepare the necessary journal entries to record the asset exchange on the books of both companies. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Pearl Corporation:

Account Titles and Explanation	Debit	Credit
CashGain on Disposal of EquipmentEquipment (New)Accumulated Depreciation - EquipmentLoss on Disposal of EquipmentEquipment (Old)
Equipment (New)Equipment (Old)Loss on Disposal of EquipmentAccumulated Depreciation - EquipmentCashGain on Disposal of Equipment
Gain on Disposal of EquipmentLoss on Disposal of EquipmentAccumulated Depreciation - EquipmentEquipment (New)Equipment (Old)Cash
Loss on Disposal of EquipmentEquipment (Old)Equipment (New)Accumulated Depreciation - EquipmentCashGain on Disposal of Equipment

Martinez Ltd.:

Account Titles and Explanation	Debit	Credit
CashGain on Disposal of EquipmentEquipment (Old)Accumulated Depreciation - EquipmentLoss on Disposal of EquipmentEquipment (New)
Loss on Disposal of EquipmentEquipment (Old)Accumulated Depreciation - EquipmentCashEquipment (New)Gain on Disposal of Equipment
Accumulated Depreciation - EquipmentEquipment (New)Loss on Disposal of EquipmentCashEquipment (Old)Gain on Disposal of Equipment
Equipment (New)CashLoss on Disposal of EquipmentEquipment (Old)Accumulated Depreciation - EquipmentGain on Disposal of Equipment
Equipment (Old)Loss on Disposal of EquipmentEquipment (New)Accumulated Depreciation - EquipmentCashGain on Disposal of Equipment

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