KMG Corporation is in the business of manufacturing and selling seasonal handcrafts and other decorative items. The company operates one retail shop in the Seattle area, and also rents space at the famous Pike Place Market at which it displays and sells its merchandise.
The following transactions for KMG Corporation occurred during 2006:
1. On September 4, 2006, The company disposed of 2 obsolete computers with an original cost of $1,000 each. The computers were fully depreciated at the time of the disposal, and KMG Corporation received no proceeds on the disposition.
2. On March 11, 2006, the company completed a special order for a local home gallery. The order included an arrangement of dried flowers and spring wreaths that cost the company $1,500 to produce. The items were sold for $3,500 on March 17, 2006.
3. On November 30, 2006, the company sold 2 display cases to another vendor for $2,500 each. The display cases were purchased in January 2005 and had been used by KMG to display its inventory at the Market. The cases had a net book value of $1,000 each at the time of the sale.
Required:
Compute the gain or loss on fixed asset dispositions that KMG Corporation would recognized for the year ending December 31, 2006.