Asked by Grace Hummel on Jul 11, 2024
Verified
If a plant asset is retired before it is fully depreciated and no salvage value is received
A) a gain on disposal occurs.
B) a loss on disposal occurs.
C) either a gain or a loss can occur.
D) neither a gain nor a loss occurs.
Fully Depreciated
A term used when a fixed asset has been depreciated to its salvage value and no longer carries a cost on the balance sheet except its possible residual value.
Loss on Disposal
Represents the financial loss a company incurs when it disposes of an asset for less than its carrying value.
- Calculate the fiscal difference, either gain or loss, when an asset is sold.
Verified Answer
SA
Salvador Ayala-MendozaJul 17, 2024
Final Answer :
B
Explanation :
If a plant asset is retired before it is fully depreciated and no salvage value is received, a loss on disposal occurs. This is because the book value of the asset (original cost minus accumulated depreciation) exceeds the amount received from the disposal, resulting in a loss.
Learning Objectives
- Calculate the fiscal difference, either gain or loss, when an asset is sold.
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