Equipment that cost $30,000 and has accumulated depreciation of $12,000 is exchanged for similar equipment with a fair value of $24,000. The old machine has a fair value of $17,500. In addition, $5,000 cash is paid for the new equipment. Assume there is commercial substance. What is recognized from the exchange is?

$0 gain or loss

$1,500 gain

$500 gain

$500 loss