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Question(s) / Instruction(s):

A machine cost $24,000, has annual amortization of $4,000, and has accumulated amortization of $18,000 on December 31, 2006. On April 1, 2007, when the machine has a market value of $5,500, it is exchanged for a similar machine with a fair value of $27, 000 and the proper amount of cash is paid. Assume commercial substance exists.
The gain to be recorded on the exchange is
A.            $0
B.            $500 gain
C.            $1,000 gain
D.            $3,000 gain

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