Question

A company sells a plant asset which originally cost $366000 for $123000 on December 31, 2021. The Accumulated Depreciation account had a balance of $144000 after the current year's depreciation of $31000 had been recorded. The company should recognize a O $99000 gain on disposal. O $68000 loss on disposal. O $99000 loss on disposal. O $243000 loss on disposal.

Answer 1

When a company sells a plant asset, the gain or loss on disposal is calculated by comparing the proceeds from the sale to the book value of the asset. In this case, the company should recognize a $99,000 loss on disposal.

Step-by-step explanation:

When a company sells a plant asset, the gain or loss on disposal is calculated by comparing the proceeds from the sale to the book value of the asset. The book value of the asset is calculated by subtracting the accumulated depreciation from the original cost of the asset. In this case, the original cost of the asset is $366,000 and the accumulated depreciation is $144,000, so the book value of the asset is $366,000 - $144,000 = $222,000.

The company sold the asset for $123,000, which is less than the book value. Therefore, the company should recognize a loss on disposal. To calculate the loss on disposal, we subtract the proceeds from the book value: $222,000 - $123,000 = $99,000. So, the company should recognize a $99,000 loss on disposal.

Answer 2

Answer: 185,000$

Step-by-step explanation: