The disposal of equipment for an amount of cash greater than the carrying value of the equipment results in a cash receipt equal to the carrying value of the equipment plus the gain on the disposal, which appears in net income.

Question

Quizplus · Accepted Answer

When equipment is disposed of for an amount greater than its carrying value, the difference between the carrying value and the amount received is recognized as a gain on disposal. This gain is added to the carrying value of the equipment to determine the amount of cash received. Therefore, the statement is true.

The Disposal of Equipment for an Amount of Cash Greater