Final answer:
Hamilton Incorporated realized a gain of $125,000 from the sale of the industrial crane since the sale proceeds of $1,105,000 exceeded the book value of $980,000.
Step-by-step explanation:
The student is asking about calculating the gain or loss from the sale of a fixed asset, which is a common question in accounting and business coursework. To determine the gain or loss, we need to first calculate the book value of the asset at the time of sale. The book value is the original cost minus the accumulated depreciation. In this scenario, the book value of the industrial crane on December 31, 2022, is calculated as follows:
Original cost of the crane: $5,360,000
Accumulated depreciation: -$4,380,000
Book value on December 31, 2022: $980,000
The sale proceeds of the crane are $1,105,000. To find the gain or loss, we subtract the book value from the sale proceeds:
Sale proceeds: $1,105,000
Book value: -$980,000
Gain from equipment sale: $125,000
Since the sale proceeds exceed the book value, Hamilton Incorporated realized a gain of $125,000 from the equipment sale on December 31, 2022. This gain should be recorded in the financial statements as other income.