A gain is recognized on the disposal of plant assets when the sale price is
A)greater than the book value and less than the residual value.
B)greater than the book value.
C)less than both the book value and the residual value.
D)less than the book value.

Question

Quizplus · Accepted Answer

A gain on the disposal of plant assets is recognized when the sale price is greater than the book value of the asset. The book value is the cost of the asset minus any accumulated depreciation. If the sale price is less than the book value, a loss is recognized. If the sale price is equal to the book value, there is no gain or loss recognized. If the sale price is greater than the residual value but less than the book value, a partial gain would be recognized.

A Gain Is Recognized on the Disposal of Plant Assets