In 2017, Penelope Parker sold a piece of business machinery that had an adjusted basis to her of $150,000 for $175,000 cash plus artwork that had a fair market value of $25,000. The buyer assumed Penelope's $5,000 loan on the machinery and Penelope paid $2,000 in selling expenses.

1. What is the amount of Penelope's realized gain on the sale?
2. What is the amount of gain Penelope recognizes on the sale?