When an asset is sold, the gain or loss on disposal is the difference between the:

Question

Quizplus · Accepted Answer

The gain or loss on disposal of an asset is the difference between the proceeds of sale and the carrying amount of the asset, which is the net book value or the cost minus accumulated depreciation. This is because the carrying amount reflects the remaining value of the asset at the time of disposal, and any difference between that and the sale price would result in a gain or loss. Option A is incorrect because fair value is not relevant at the point of disposal, and option B is incorrect because it only considers the original cost without accounting for depreciation. Option D is also incorrect because it does not factor in the actual sale price.

When an Asset Is Sold, the Gain or Loss on Disposal