Equipment that cost $85,800 and has accumulated depreciation of $67,925 is exchanged for equipment with a fair value of $34,320 and $8,580 cash is received. The exchange lacked commercial substance.

1. How much is the gain or loss realized on the exchange (indicate gain or loss).
2. How much is the gain or loss recognized on the exchange (indicate gain or loss).

c. Prepare the journal entry to record the exchange