Wilma trades a fully depreciated computer used in her business for a new computer with a selling price of $3,200.Wilma pays only $2,500 for the computer because she receives a $200 discount as a favored customer and a $500 allowance for trading in the old computer.

a. Does Wilma recognize any gain or loss on the exchange?

b. What is the deferred gain or loss?

c. What is Wilma’s basis in the new computer?

AppendixLO1