A company sells equipment for $450,000 when the book value of the equipment is $400,000.The company would record the extra $50,000 as:
A)a gain,increasing net income and stockholders' equity.
B)revenue,increasing net income and stockholders' equity.
C)expenses,decreasing net income and stockholders' equity.
D)a loss,decreasing net income and stockholders' equity.

Question

Quizplus · Accepted Answer

Gain (loss)on disposal = Proceeds − Book Value
= $450,000 − $400,000 = $50,000
Gains on disposal are included in revenues in the income statement and,as such,increase net income and stockholder's equity.

A Company Sells Equipment for $450,000 When the Book Value