Lewis Company traded machinery with a book value of $760,000 and a fair value of $720,000. It received in exchange from Timmons Company a machine with a fair value of $800,000. Lewis also paid cash of $80,000 in the exchange. Timmons’s machine has a book value of $760,000. What amount of gain or loss should Lewis recognize on the exchange (assuming lack of commercial substance) ? a. $80,000 gain b. $ - 0-. c. $4,000 loss d. $40,000 loss
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