On December 31, 2020, Diaz Corp. is in financial difficulty and cannot pay a $900,000 note with $90,000 accrued interest payable to Cameron Ltd., which is now due. Cameron agrees to accept from Diaz equipment that has a fair value of $435,000, an original cost of $ 720,000, and accumulated depreciation of $345,000. Cameron also forgives the accrued interest, extends the maturity date to December 31, 2022, reduces the face amount of the note to $375,000, and reduces the market interest rate of 6%, with interest payable at the end of each year.

Diaz should recognize a gain or loss on the transfer of the equipment of:

$285,000 loss.

$0.

$60,000 gain.

$90,000 gain.