12. On December 31, 2005, Reese Co. is in financial difficulty and cannot pay a note due that day. It is a $600,000 note with $60,000 accrued interest payable to Trear, Inc. Trear agrees to accept from Reese equipment that has a fair value of $290,000, an original cost of $480,000, and accumulated depreciation of $230,000. Trear also forgives the accrued interest, extends the maturity date to December 31, 2008, reduces the face amount of the note to $250,000, and reduces the interest rate to 6%, with interest payable at the end of each year.Reese should recognize a gain or loss on the transfer of the equipment of

Group of answer choices

$40,000 gain.

$0.

$190,000 loss.

$60,000 gain.