Alliance Products purchased equipment that cost $120,000. It had an estimated useful life of four years and no residual value. The equipment was depreciated by the straight-line method and was sold at the end of the second year of use. For what amount should Alliance record the gain or loss if the equipment is sold for $65,000?

Alliance Products purchased equipment that cost $120,000. It had an estimated useful life of four years and no residual value. The equipment was depreciated by the straight-line method and was sold at the end of the second year of use. For what amount should Alliance record the gain or loss if the equipment is sold for $65,000?

Naim 13:31

Alliance Products purchased equipment that cost $120,000. It had an estimated useful life of four years and no residual value. The equipment was depreciated by the straight-line method and was sold at the end of the second year of use.
For what amount should Alliance record the gain or loss if the equipment is sold for $65,000?



A) Gain of $5,000.

B) Loss of $5,000.

C) Neither a gain nor a loss since the equipment was sold at its book value.

D) Neither a gain nor a loss since the gain would not be recognized.


Answer: A


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