John Smith purchases a machine on July 1, 2018. The machine was purchased on credit for $660,000 ($600,000 + $60,000 GST). The machine has an expected life of 4 years and an expected residual value of $220,000,($200,000 + $20,000GST). The machine was sold on January 1, 2020 for $385,000 ($350,000 + $35,000 GST). The company uses straight-line depreciation. Calculate the gain / loss on disposal.

Select one:

a. 350,000 gain on sale

b. 100,000 gain on sale

c. 135,000 gain on sale

d. 125,000 gain on sale

e. 100,000 loss on sale