Resale of yearly-depreciated machine within a year

[Farkhanda]

An equipment purchased for Rs. 1,200,000 (with no resale value and life of 5 years) on Jan 1 2010 for the purpose of contract-based production. The equipment is depreciated by a straight line method. (It is not mentioned in the question whether the company uses annual or monthly depreciation).
After three months, the contract was cancelled for some reasons. Company decided to sale its equipment and some other company purchased it at Rs. 500,000 at April 1, 2010.
Now how we should treat such Loss where equipment is being sold in less than 1 year. Whether the loss on sale would be 5 lacs - 12 lacs = 7 lacs (as annual depreciation is charged at the end of year and since there has been four months now, so no depreciation would be charged)?
Or should this calculation account for accumulated depreciation of 1st year. In this case the book value will be (12 lacs - 2.4 lacs = 9.6 lacs) and then the loss on sale would be 5 lacs - 8 lacs = 4.6 lacs.

Or the accumulated depreciation should be calculated for just three months i.e. accumulated dep. is (monthly dep 20000 x 3 = 60000)
Book value will be 1200000 - 60000 = 1140000 and Loss on sale would be 500,000 - 1140000 = 640,000?

Note that it is not mentioned in the question that whether the company charges on monthly or annual based depreciation...

Please sort out the right method...that's really confusing me...