..ll Sprint LTE * 67% 5:15 AM State University of New York Problem #4 Derek's Machine Works Ltd. owns a lathe with an original cost of $250,000 and a current book value of $65,000. The company is considering exchanging or trading-in their existing machine for more suitable machines owned by Bernie, Tino and Mariano Machine Dealers Co. Information pertaining to the prospective exchanges or trade-in is as follows: L. Mariano Cost basis Accum. Deprec. Fair Value List price Inventory cost Bernie $ 325,000 $ 175,000 $ 125,000 Tino 160,000 60,000 72,250 || $ $ 275,000 225,000 Assume these transactions lack "commercial substance" Instructions a Record the exchange on the books of Derek and Bernie assuming that Derek will pay Bernie $40,000. (Fair value of Derek's machine = $85,000). bRecord the exchange on the books of Derek and Tino assuming that Tino pays Derek $12,750 c Record the purchase/sale on the books of Derek and Mariano assuming that Derek pays Mariano $190,000