Company B disposed of obsolete computer equipment with a $32,000 initial cost basis and $27,000 accumulated depreciation.

Question:

Company B disposed of obsolete computer equipment with a $32,000 initial cost basis and $27,000 accumulated depreciation. Determine the amount and character of Company B’s recognized gain or loss if:
a. It sold the equipment for $7,000.
b. It sold the equipment for $1,000.
c. It dumped the equipment in a local landfill.