A loss on disposal of a plant asset occurs if the cash proceeds received from the asset sale is less than the asset's book value.

Question

Quizplus · Accepted Answer

This statement is true. A loss on disposal of a plant asset occurs when the cash proceeds received from the sale of the asset are less than its book value. The book value of an asset is its original cost minus accumulated depreciation. If the asset is sold for less than its book value, it means that the company has lost value on the asset, resulting in a loss that must be recognized in the income statement.

A Loss on Disposal of a Plant Asset Occurs If