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 third year of use.For what amount should Alliance record the gain or loss if the equipment is sold for $25,000?
A. A gain of $5,000.
B. A 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: B
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