Any power-modifying effects, counters, Auras, or Equipment will apply to the creatures’ new powers. For example, say Serene Master is enchanted with Lightning Talons, which gives it +3/+0, and it blocks a 5/5 creature. After the exchange, Serene Master would be an 8/2 creature (its power became 5, which was then modified by Lightning Talons), and the other creature would be 3/5.