When selling property, plant, and equipment for cash:

Question

Quizplus · Accepted Answer

When selling property, plant, and equipment for cash, the seller recognizes a gain or loss for the difference between the cash received and the book value of the asset sold. Book value is the cost of the asset minus accumulated depreciation, and it represents the carrying amount of the asset on the balance sheet. Therefore, the gain or loss on the sale reflects the discrepancy between the cost of the asset and the amount of depreciation that has been recognized up to the date of sale. The fair value of the asset may be relevant for determining the selling price, but it does not affect the computation of the gain or loss.

When Selling Property, Plant, and Equipment for Cash