On January 1, 2017, plant assets, net are $180,000. On December 31, 2017, plant assets, net are $290,000. Depreciation expense for the year is $20,000. During the year, plant assets were acquired for $150,000 with cash. There is a Gain on sale of plant asset of $9000. What are the cash proceeds from the sale of the plant asset?
A)$0
B)$11,000
C)$20,000
D)$29,000

Question

Quizplus · Accepted Answer

The increase in plant assets, net is $110,000 ($290,000 - $180,000). Adding back the depreciation expense of $20,000 gives a total increase of $130,000. Since $150,000 was spent on new assets, the difference of $20,000 must be the net book value of the asset sold. With a gain of $9,000, the cash proceeds from the sale are $29,000 ($20,000 + $9,000).

On January 1, 2017, Plant Assets, Net Are $180,000