Profit on the sale of an asset is calculated:

Question

Quizplus · Accepted Answer

Profit on the sale of an asset is calculated by subtracting the updated carrying amount from the net proceeds on disposal. The updated carrying amount takes into account any accumulated depreciation up to the date of sale. Option A is incorrect as disposal proceeds are subtracted from the carrying amount of the asset to calculate the loss on disposal. Option B is incorrect as fair value is only used to measure the carrying amount of an asset in certain circumstances, not to calculate profit on sale. Option C is incorrect as depreciation up to the date of sale is considered in the updated carrying amount calculation.

Profit on the Sale of an Asset Is Calculated