A gain is recognized on the disposal of plant assets when:
A) The sales price is greater than the book value and less than the residual value.
B) The sales price is greater than the book value and greater than the residual value.
C) The sales price is less than both the book value and the residual value.
D) The sales price is greater than the residual value but less than the book value.

Question

Quizplus · Accepted Answer

A gain on the disposal of plant assets is recognized when the sales price is greater than the book value. Additionally, if the sales price is greater than the residual value, it indicates that the asset has been sold for more than its expected salvage value, which also results in a gain. Therefore, option B is the correct choice as it satisfies both conditions for gain recognition on disposal of plant assets.

A Gain Is Recognized on the Disposal of Plant Assets