Case B. Kapono Farms exchanged 100 acres of farmland for similarland. The farmland given had a book value of $520,000 and a fairvalue of $740,000. Kapono paid $54,000 cash to complete theexchange. The exchange has commercial substance. 1.1 What is theamount of gain or loss that Kapono would recognize on the exchange?1.2 What is the initial value of the new land? Assume the fairvalue of the farmland given is $416,000 instead of $740,000. 2.1What is the amount of gain or loss that Kapono would recognize onthe exchange? 2.2 What is the initial value of the new land?