Problem #2 Derek's Machine Works Ltd. owns a lathe with an original cost of $250,000 and a current book value of $100,000. The company is considering exchanging or trading-in their existing machine for more suitable machines owned by Bernie, Tino and Mariano Machine Dealers Co. Information pertaining to the prospective exchanges or trade-in is as follows: Mariano Cost basis Accum. Deprec. Fair Value List price Inventory cost $ $ $ Derek 250,000 $ 150,000 $ 90,000 $ Bernie 325,000 $ 205,000 $ 135,000 $ Tino 160,000 90,000 100,000 $ 195,000 $ 165,000 a b Instructions Record the exchange on the books of Derek and Bernie assuming that Derek will pay Bernie $45,000. Assume this transaction has commercial substance Record the exchange on the books of Derek and Tino assuming that Derek Pays Tino $10,000 Assume this transactions lacks "commercial substance" Record the purchase/sale on the books of Derek and Mariano assuming that Derek pays Mariano $105,000 Assume this transaction has commercial substance