A plant asset with a cost of $30,000 and accumulated depreciation of $27,500 is sold for $3,500. What is the amount of the gain or loss on disposal of the plant asset?
A) $2,500 loss.
B) $1,000 loss.
C) $1,000 gain.
D) $2,500 gain.

Question

Quizplus · Accepted Answer

The gain on disposal is $1,000. The carrying amount is ($30,000 - $27,500) = $2,500 which is $1,000 less than the sales proceeds, therefore a gain is recorded.

A Plant Asset with a Cost of $30,000 and Accumulated