Desert, Co. is trading a machine which has an original cost of $60,000 and accumulated depreciation of $35,000, for another fixed asset. For each of the following independent scenarios, determine the amount to be capitalized for the new fixed asset that Desert is acquiring (i.e. the original cost Desert will report on their balance sheet for the new asset) and the gain or loss to be recognized at the time of the exchange. Desert paid $5,100 and exchanged the old asset. The fair value of the new asset received was $28,000. The exchange has commercial substance.

1.)What is the Original Cost of the NEW Asset reported on Desert's Balance Sheet?

2.)What is the amount of the gain or loss (if any) Desert will recognize as a result of this transaction?