Dodson Company traded in a manual pressing machine for an automated pressing machine and gave $40,000 cash. The old machine cost $455,000 and had a net book value of $355,000. The old machine had a fair market value of $300,000. Which of the following is the correct journal entry to record the exchange?

The journal entry includes a debit to Equipment $340,000 and a debit to Loss $55,000.

The journal entry includes a debit to Equipment $340,000 and a debit to Cash $40,000.

The journal entry includes a debit to Equipment $285,000 and a credit to Accumulated Depreciation $110,000.

The journal entry includes a debit to Equipment $285,000 and a debit to Accumulated Depreciation $110,000.