If a long-lived asset is sold before it is fully depreciated, and the proceeds received is less than the asset's carrying amount,
A) a gain on disposal occurs.
B) a loss on disposal occurs.
C) there is no gain or loss on disposal.
D) additional depreciation expense must be recorded.

Question

Quizplus · Accepted Answer

When the proceeds from the sale of a long-lived asset are less than the asset's carrying amount (book value), it results in a loss on disposal. This is because the asset is sold for less than its recorded value on the books after accounting for depreciation.

If a Long-Lived Asset Is Sold Before It Is Fully