An asset's book value is $18,900 on December 31, Year 5. The asset has been depreciated at an annual rate of $3,900 on the straight-line method. Assuming the asset is sold on December 31, Year 5 for $15,900, the company should record:

Multiple Choice

• A loss on sale of $2,850.

• A loss on sale of $3,000.

• A gain on sale of $3,000.

• Neither a gain nor a loss is recognized on this type of transaction.

• A gain on sale of $2,850.