Gabrielle Inc. and Lucci Company have an exchange with no commercial substance. The asset given up by Gabrielle has a book value of 120,000 and a fair value of 135,000. The asset given up by Lucci has a book value of 220,000 and a fair value of 200,000. Boot of 65,000 is received by Lucci.

The journal entry made by Lucci to record the exchange will include a. a debit to Gain on Exchange for 20,000. b. a credit to Cash for 65,000. c. a credit to Equipment for 200,000. d. a debit to Loss on Exchange for 20,000

My journal entry is

(credit) Cash 65,000

(credit) Equipment(new) 155,000

(debit) Equipment(old) 220,000

So I think the answer is option b.

But the correct answer is option d.

Why?

If there is no commercial substance, we don't record gain or loss. Isn't it?

Plz give me a detailed explaination.

Thank you for your answer in advance!