Ocular Company traded an electron microscope with an original cost of $200,000 and accumulated depreciation of $80,000 for a new optical equipment (a similar asset). The old equipment had two years of remaining useful life and the new equipment has eight years of useful life. The old equipment had a fair market value of $160,000 at the time of trade-in, and Ocular received $30,000 on the trade-in.
Required:
a. What type of exchange took place in this transaction?
b. Show all the necessary journal entries to record the exchange.