Asset Disposal Assume that Gonzalez Company purchased an asset on January 1, 2008, for $60,000. The asset had an estimated life of six years and an estimated residual value of $6,000. The company used the straight-line method to depreciate the asset. On July 1, 2010, the asset was sold for $40,000.
Required
1. Identify and analyze the effect of the transaction for depreciation for 2010. Identify and analyze the effect of the sale of the asset.
2. How should the gain or loss on the sale of the asset be presented on the income statement?