Answer:
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
