1. Hunter Sailing Company exchanged an old sailboat for a new one. The old sailboat had a cost of $270,000 and accumulated depreciation of $135,000. The new sailboat had an invoice price of $282,000. Hunter received a trade in allowance of $147,000 on the old sailboat, which meant the company paid $135,000 in addition to the old sailboat to acquire the new sailboat. If this transaction has commercial substance, what amount of gain or loss should be recorded on this exchange?

$12,000 loss $135,000 loss $0 gain or loss $12,000 gain $147,000 gain