If the proceeds from the sale of a plant asset exceed its book value a gain on disposal occurs.

Question

Quizplus · Accepted Answer

When the proceeds from the sale of a plant asset exceed its book value, a gain on disposal occurs. This is because the book value represents the asset's value on the company's financial statements, which may be less than the actual market value of the asset. The difference between the proceeds and the book value is recognized as a gain on disposal in the company's financial records.

If the Proceeds from the Sale of a Plant Asset