A company sells a plant asset which originally cost ¥210,000 for ¥70,000 on December 31, 2011.The Accumulated Depreciation account had a balance of ¥84,000 after the current year's depreciation of ¥21,000 had been recorded.The company should recognize a

Question

Quizplus · Accepted Answer

The book value of the plant asset can be calculated as follows:
Book Value = Cost - Accumulated Depreciation
Book Value = ¥210,000 - ¥84,000
Book Value = ¥126,000

Since the company sold the plant asset for ¥70,000, there is a loss on disposal. The amount of the loss can be calculated as follows:
Loss on Disposal = Book Value - Selling Price
Loss on Disposal = ¥126,000 - ¥70,000
Loss on Disposal = ¥56,000

Therefore, the company should recognize a ¥56,000 loss on disposal. Option C is correct.

A Company Sells a Plant Asset Which Originally Cost ¥210,000