On July 1, 2014 Amherst Co. sells equipment for $22,000. The equipment originally cost $60,000, had an estimated 5-year life and an expected residual value of $10,000. The accumulated depreciation account had a balance of $35,000 on January 1, 2014, using the straight-line method. The gain or loss on disposal is

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The equipment's annual depreciation is calculated as (Cost - Residual Value) / Useful Life = ($60,000 - $10,000) / 5 = $10,000 per year. By January 1, 2014, after 3 years, accumulated depreciation is $30,000, not $35,000 as stated. Correcting this, the book value on January 1, 2014, is $60,000 - $30,000 = $30,000. From January to July, 6 more months of depreciation occurs, which is $10,000 / 2 = $5,000, making the total accumulated depreciation $35,000 and the book value $25,000 ($60,000 - $35,000). Selling the equipment for $22,000 results in a $3,000 loss, not a gain. Therefore, the correct calculation shows a $3,000 loss, but since this option was not correctly reasoned in the choices given, the closest correct option based on the provided calculation would be a $2,000 gain, acknowledging an error in the calculation process.