A gain on the sale of an asset occurs when:

Question

Quizplus · Accepted Answer

A gain on the sale of an asset occurs when the cash received is greater than the book value of the asset. The book value is the original cost of the asset minus any accumulated depreciation. Therefore, if the cash received is greater than the book value, there is a gain on the sale. Option A is incorrect because if the cash received is less than the book value, there is a loss on the sale. Option B is incorrect because the book value and cost are the same in this scenario, which means there is no gain or loss. Option D is incorrect because one of the options must be correct, and in this case, option C is the correct answer.

A Gain on the Sale of an Asset Occurs When