When a depreciable asset is sold,a tax gain or tax loss on disposal is calculated,based on the book value of the asset at the time of disposal.If a ________ has occurred,a ________ is recorded.

Question

Quizplus · Accepted Answer

When a depreciable asset is sold and there is a loss on disposal, a tax credit is recorded. This is because the loss on disposal can be used to offset taxable income, thereby reducing the tax liability. A gain on disposal, on the other hand, would result in a tax increase as it increases the taxable income. Therefore, option C is the best choice.

When a Depreciable Asset Is Sold,a Tax Gain or Tax