A machine that cost $300,000 has annual depreciation expense of $60,000 and accumulated depreciation of $150,000 at December 31, 2023. On April 1, 2024, when the machine has a fair value of $120,000, it is exchanged for a similar machine with a fair value of $360,000 and the proper amount of cash is paid to equalize the exchange. This exchange lacks commercial substance.

Prepare the necessary accounting entries on April 1, 2024.