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Lorch Company Exchanged an Old Asset with a $120,700 Tax

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Essay

Lorch Company exchanged an old asset with a $120,700 tax basis and a $155,000 FMV for a new asset with a $142,250 FMV and $12,750 cash.
a.If the old asset and the new asset are like-kind properties,compute Lorch's realized and recognized gain and Lorch's tax basis in the new asset.
b.How would your answers change if the new asset is worth only $116,000,and Lorch received $39,000 cash in the exchange?


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