A gain on sale of assets arises when an asset is sold for more than its carrying amount. The carrying amount is the purchase price of the asset, minus any subsequent depreciation and impairment charges. The gain is classified as a non-operating item on the income statement of the selling entity.
For example, a business buys a machine for $10,000 and subsequently records $3,000 of depreciation, resulting in a carrying amount of $7,000. The company then sells the machine for $7,500, which results in a gain on sale of assets of $500.