The gain or loss on the disposal of equipment is determined by _____.
A)adding the book value of the old equipment to the cost of the new equipment
B)adding the disposal value and the book value of the old equipment
C)subtracting the book value from the cash received for the old equipment
D)subtracting the book value of the old equipment from the cost of the new equipment

Question

Quizplus · Accepted Answer

The gain or loss on the disposal of equipment is calculated by subtracting the book value of the old equipment from the cash received for the sale of the old equipment. This is because book value represents the amount that the company has already depreciated the equipment on its books, and cash received represents the actual amount received in the sale, which may be different from the book value.

The Gain or Loss on the Disposal of Equipment Is