Illustration 1: On Jan 1, 2020, Lemon company purchased A machine wit cost $500,000, residual value 50,000 and useful life 5 years. On April 1, 2023, when the machine has a fair value of $250,000, it is exchanged for a similar machine with a fair value of $360,000 and the proper amount of cash is paid. The exchange lacked commercial substance.

Prepare all entries that are necessary at April 1, 2023.