A gain is recognized on the disposal of plant assets when:
A)The sales price is greater than the residual value but less than the book value.
B)The sales price is less than both the book value and the residual value.
C)The sales price is greater than the book value and greater than the residual value.
D)The sales price is greater than the book value and less than the residual value.

Question

Quizplus · Accepted Answer

A gain on disposal of a plant asset is recognized when the sales price is greater than the book value (the original cost of the asset minus accumulated depreciation) and greater than the residual value (the estimated value of the asset at the end of its useful life). Therefore, option C is the correct choice.

A Gain Is Recognized on the Disposal of Plant Assets