Problem 17-55 (LO. 3, 8)

Jay sold three items of business equipment for a total of $300,000. None of the equipment was appraised to determine its value. Jay's cost and adjusted basis for the assets are as follows:

Asset	Cost		Adjusted Basis
Skidder	$230,000			$40,000
Driller	120,000			60,000
Platform	620,000			0
Total	$970,000			$100,000

Jay has been unable to establish the fair market values of the three assets. All he can determine is that combined they were worth $300,000 to the buyer in this arm's length transaction. How should Jay allocate the sales price and figure the gain or loss on the sale of the three assets? If an amount is zero, enter "0".

c. If Jay allocates the $300,000 selling price to each asset based on its relative original cost, determine the gain or loss. In your computation, round any division to 6 decimal places. Then, round your final answer to the nearest whole dollar.

Asset	Allocated Sale Price		Adjusted Basis		Difference	Gain or Loss
Skidder			$40,000
Driller			60,000
Platform			0
Total	$300,000		$100,000