A company sells a plant asset which originally cost $180,000 for $60,000 on December 31, 2010. The Accumulated Depreciation account had a balance of $72,000 after the current year's depreciation of $18,000 had been recorded. The company should recognize a
A) $120,000 loss on disposal.
B) $48,000 gain on disposal.
C) $48,000 loss on disposal.
D) $30,000 loss on disposal.

Question

Quizplus · Accepted Answer

The book value of the asset at the time of disposal is calculated as follows: 
Original cost - Accumulated depreciation = $180,000 - $72,000 = $108,000. 
The company sold the asset for $60,000, resulting in a loss on disposal of $48,000 ($108,000 - $60,000 = $48,000). Therefore, the correct answer is choice C.

A Company Sells a Plant Asset Which Originally Cost $180,000