If a plant asset is retired before it is fully depreciated and no salvage value is received,

Question

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If a plant asset is retired before it is fully depreciated and no salvage value is received, a loss on disposal occurs. This is because the company will have recorded the cost of the asset on its books but will not have received any cash or other assets in return for the asset. The loss is the difference between the cost of the asset and the total amount of depreciation that has been recorded up until the date of retirement.

If a Plant Asset Is Retired Before It Is Fully