When assets are disposed of through sale or abandonment,we recognize gains or losses when the asset's net carrying amount is not equal to the cash received.

Question

Quizplus · Accepted Answer

This statement is true. When an asset is sold, if the cash received is greater than the net carrying amount (cost less accumulated depreciation), a gain is recognized. If the cash received is less than the net carrying amount, a loss is recognized. Similarly, when an asset is abandoned or disposed of in any other way, the difference between the net carrying amount and the proceeds received is recognized as a gain or loss.

When Assets Are Disposed of Through Sale or Abandonment,we Recognize