What was the gain/loss on disposal of the machine?

Question

Francisco purchased a machine on January 1, 2012 for $600,000. Francisco estimated a useful life of 10 years and residual value of $10,000. The company uses straight-line depreciation. The machine was sold on December 31, 2014 for $350,000.

Answer 1

Depreciation/year = ($600,000 - $10,000)/10 = $59,000/ year

Depreciation from 1/1/12 to 12/31/14 = $59,000 * 3 = $177,000

Book value at 12/31/14 = $600,000 - $177,000 = $423,000

Gain/(loss) on sale = $350,000 - $423,000 = $(73,000)

They have a $73,000 loss on disposal.