Equipment that cost $$600,000$ and has accumulated depreciation of $$475,000$ is exchanged for equipment with a fair value of $$240,000$ and $$60,000$ cash is received. The exchange lacked commercial substance.

Instructions

$($a$)$ Show the calculation of the gain to be recognized from the exchange.

$($b$)$ Prepare the entry for the exchange. Show a check of the amount recorded for the new equipment.