Equipment that cost $220,000 and has accumulated depreciation of $100,000 is exchanged for equipment with a fair value of $160,000 and $40,000 cash is received. The exchange lacked commercial substance.

The gain to be recognized from the exchange is a. $16,000 b. $20,000 c. $60,000 d. $80,000

The new equipment should be recorded at a. $160,000. b. $120,000. c. $100,000. d. $96,000.