Use the Following Information for Questions 108 and 109

Multiple Choice

Use the following information for questions 108 and 109.
A machine cost $600,000, has annual depreciation of $100,000, and has accumulated depreciation of $450,000 on December 31, 2014. On April 1, 2015, when the machine has a fair value of $137,500, it is exchanged for a machine with a fair value of $675,000 and the proper amount of cash is paid. The exchange had commercial substance.
-The gain to be recorded on the exchange is

A) $0.
B) $12,500
C) $25,000
D) $75,000