If a plant asset is retired before it is fully depreciated, and the salvage value received is less than the asset's book value,

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When a plant asset is retired before it is fully depreciated, and the salvage value received is less than the asset's book value, a loss on disposal occurs. This is because the asset is being sold for less than its recorded value on the company's books. The difference between the book value and the salvage value is recognized as a loss on the income statement.

If a Plant Asset Is Retired Before It Is Fully