Lane Co. has a machine that cost 255k on 3/20/07. Old mach. had 10yrs estimated life w/salvage val. of 15k. 12/23/11 old mach. is exchanged for new mach. w/market val. of 162k. Exchg lacked commercial substance. Lane also recd 18k cash. Assume last fiscal period ended 12/31/10 and straight line dep. is used.
1. Show calculation of amt of gain/loss recognized by Lane co from exchange.
2. Prepare entries necessary on 12/23/11 and show check of the amt recorded for new mach.