The Cromwell Company sold equipment for $35,000. The equipment, which originally cost $120,000 and had an estimated useful life of 10 years and $20,000 residual value, was depreciated for four years using the straight-line method. Cromwell should report the following on its income statement in the year of sale:

• A $45,000 loss.

• A $45,000 gain.

• A $25,000 gain.

• All of these answer choices are incorrect.