A machine cost $160,000, has annual depreciation expense of $32,000, and has accumulated depreciation of $80,000 on December 31, 2014. On April 1, 2015, when the machine has a fair value of $64,000, it is exchanged for a similar machine with a fair value of $192,000 and the proper amount of cash is paid. The exchange lacked commercial substance.

Instructions

Prepare all entries that are necessary at April 1, 2015.