On December 31, 2016, Hamilton Inc. sold a used industrial crane for $1,045,000 cash. The original cost of the crane was $5.28 million and its accumulated depreciation equaled $4.34 million on December 31, 2016. What is the gain or loss from the December 31, 2016 equipment sale?

A gain on disposal of $105,000

Explanation:

The gain or loss on the disposal of an asset is dependent on whether the amount received from the disposal of the asset is more or less than the book value or carrying amount of the asset.

The book amount is the difference between the historical cost of the asset and the accumulated depreciation as at the time of disposal.

Gain / (loss) = Disposal Amount - Asset NBV

= Disposal amount - (cost less accumulated depreciation)

= $1,045,000 - ($5,280,000 - $4,340,000)

= $105,000