The gain or loss on the disposal of equipment is determined by ________.
A) subtracting the book value of the old equipment to the cost of the new equipment
B) subtracting 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 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 determined by subtracting the book value of the old equipment from the cash received for the old equipment. This calculation is necessary to determine whether there is a gain or loss on the sale of the equipment. Book value is the value of the asset as shown on the company's balance sheet, which is determined by subtracting accumulated depreciation from the original cost of the asset. The cash received for the old equipment is the selling price of the asset less any selling expenses.

The Gain or Loss on the Disposal of Equipment Is