Pepitone Inc.exchanged a machine costing $400,000 with accumulated depreciation of $280,000 for a machine from the Berra Company.Berra paid $20,800 cash in addition to its machine (which cost $200,000 with accumulated depreciation of $68,000)for the Pepitone machine.The Berra machine has a fair value of $160,000.
Provide the necessary entries to record the transactions on both companies' books assuming the machine lacks commercial substance.

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The Answer of Pepitone Inc.exchanged a machine costing $400,000 with accumulated depreciation of $280,000 for a machine from the Berra Company.Berra paid $20,800 cash in addition to its machine (which cost $200,000 with accumulated depreciation of $68,000)for the Pepitone machine.The Berra machine has a fair value of $160,000.
Provide the necessary entries to record the transactions on both companies' books assuming the machine lacks commercial substance.