If a plant asset is sold before it is fully depreciated
A) only a gain on disposal can occur.
B) only a loss on disposal can occur.
C) either a gain or a loss can occur.
D) neither a gain nor a loss can occur.

Question

Quizplus · Accepted Answer

When a plant asset is sold before it is fully depreciated, either a gain or a loss can occur depending on whether the selling price is greater or less than the asset's net book value. If the selling price is greater, a gain on disposal will occur. If the selling price is less, a loss on disposal will occur.

If a Plant Asset Is Sold Before It Is Fully