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 of the old equipment to the book value of the old equipment
C)subtracting the book value of the old equipment from the cash received from 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 disposal of equipment is calculated by subtracting the book value of the old equipment from the cash received from the sale of the equipment. This is because the book value represents the net value of the asset on the company's balance sheet at the time of disposal, and the difference between the book value and the cash received represents either a gain or loss for the company. Options A, B, and D do not accurately reflect the calculation of gain or loss on disposal of equipment.

The Gain or Loss on the Disposal of Equipment Is