A gain will result when the cash received from the sale of a plant asset exceeds the book value of the asset.

Question

Quizplus · Accepted Answer

This statement is true. A gain on the sale of a plant asset occurs when the cash received from the sale exceeds the asset's book value at the time of sale. The book value is calculated by subtracting the accumulated depreciation from the original cost of the asset. If the cash received is greater than the book value, a gain is recorded on the sale. Conversely, if the cash received is less than the book value, a loss is recorded.

A Gain Will Result When the Cash Received from the Sale