Asked by Melissa Gonzalez on May 17, 2024
Verified
Gains and losses on disposal of a long-lived asset are determined by comparing the asset's cost to its book value.
Book Value
The value of an asset according to its balance sheet account balance, which represents the cost of the asset minus any depreciation, amortization, or impairment costs.
Disposal
Disposal refers to the act of selling, discarding, or removing an asset from a company's balance sheet, often due to obsolescence, excess, or replacement.
Long-Lived Asset
A long-lived asset is a tangible or intangible asset with a useful life of more than one year, used in the operating activities of a business, such as buildings, machinery, or patents.
- Apply the correct accounting treatment for asset acquisitions, exchanges, and disposals.
Verified Answer
DF
daisy fuentesMay 19, 2024
Final Answer :
False
Explanation :
Gains and losses on disposal of a long-lived asset are determined by comparing the asset's selling price to its book value, not its cost. The book value is calculated as the asset's cost minus accumulated depreciation.
Learning Objectives
- Apply the correct accounting treatment for asset acquisitions, exchanges, and disposals.