3. Future Foundations purchased equipment on January 1, Year 1, for $50,000, with an estimated useful life of five years and an estimated residual value of $5,000. On July 1, Year 3, the equipment was sold for $17,500 cash.

The company uses the straight line method of depreciation.

What is the amount of gain (loss) to be recorded on disposal of the equipment in Year 3?

	a.	$5,000 gain
	b.	$7,500 gain
	c.	$10,000 loss
	d.	$14,500 loss