A piece of equipment purchased on January 1 for $16,000 was estimated to have a residual value of $4,000 at the end of its ten-year useful life. Assume the equipment was depreciated using the straight-line method.

1. What will be the balance in accumulated depreciation at the end of two full years of use?

2. Assume the equipment is sold after 2 full years of use, for proceeds of $13,000, what amount of gain or loss would be reported on the income statement?