Walker Co. had a machine which it purchased for $1,200,000 on January 1, 2016. This old machine had an estimated life of ten years and a salvage value of $200,000. On April 1, 2021, the old machine is exchanged for a new machine; the exchange lacked commercial substance. The new machine has a fair value of $600,000. Walker also received $150,000 cash. Assume that the company uses the straight-line method of depreciation and has a December 31 fiscal year end.

Instructions(a) Show the calculation of the amount of the gain or loss on exchange to be recognized by Walker Co.(b)Prepare all entries that are necessary on April 1, 2021.