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A company bought equipment at a cost of $68,000. The equipment has an estimated residual value of $4,000 and an estimated life of eight years, or 12,500 hours of operation. The equipment was purchased on January 1, 2008. During the first year of operation, it was used for 1,800 hours. At the end of seven years, the company expects to replace this old equipment with a newer model at an estimated cost of $85,000. If the company uses the straight-line depreciation method and sells the equipment for $18,000 cash at the end of Year 7, what is the gain or loss on the sale? A. $6,000 C. $56,000 B. $18,000 D. $68,000

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