A company sells a plant asset which originally cost $360,000 for $120,000 on December 31, 2018. The Accumulated Depreciation account had a balance of $144,000 after the current year's depreciation of $36,000 had been recorded. The company should recognize a

Question

Quizplus · Accepted Answer

The Gain/Loss on disposal of a plant asset is calculated as the difference between the cash received from the sale and the book value of the asset. Book value can be calculated as the original cost of the asset minus the accumulated depreciation up to the date of sale.

Book value = $360,000 - $144,000 = $216,000

Since the company received $120,000 from the sale, there is a loss on disposal of:

Loss on disposal = $216,000 - $120,000 = $96,000

Therefore, the correct answer is option C - $96,000 loss on disposal.

A Company Sells a Plant Asset Which Originally Cost $360,000