If the proceeds from the sale of a plant asset exceed its book value, a gain on disposal occurs.

Question

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This is correct. If the proceeds (i.e., the amount of cash received) from the sale of a plant asset are greater than its book value (i.e., the historical cost of the asset minus accumulated depreciation), then a gain on disposal occurs. Conversely, if the proceeds are less than the book value, a loss on disposal occurs.

If the Proceeds from the Sale of a Plant Asset