Arlington LLC traded machinery used in its business to a machinery dealer for some new machinery. Arlington originally purchased the machinery for $78,000 and it had an adjusted basis of $37,000 at the time of the exchange. The new machinery had a fair market value of $39,500. Arlington also received $11,000 of office equipment in the transaction. What is Arlington's gain or loss recognized on the exchange?

A) $13,500

B) $11,000

C) $0

D) $2,500

E) None of the choices are correct