18-4 Disposing of Plant Assets

Loss on plant assets is revenue that results when a plant asset is sold for more than book value.

False

If a plant asset costs $1,200, has accumulated depreciation of $1,000, and is sold for $200, the gain or loss on disposal is a. no gain or loss b. $1,000 loss c. $200 gain d. $200 loss

a. no gain or loss

When a plant asset is disposed of, a journal entry is recorded that a. removes the original cost of the plant asset and its related accumulated depreciation b. recognizes the annual depreciation c. closes the depreciation expense account to Income Summary d. removes the amount owed on the plant asset from Accounts Payable

a. removes the original cost of the plant asset and its related accumulated depreciation

If a plant asset costs $4,000, has accumulated depreciation of $3,200, and is sold for $900, the gain or loss on disposal is a. $900 gain b. $100 gain c. $800 loss d. $100 loss

b. $100 gain

When a plant asset is sold for the asset's book value, a. cash received plus salvage value equals original cost b. cash received plus accumulated depreciation equals original cost c. cash received plus accumulated depreciation plus salvage value equals original cost d. cash received minus accumulated depreciation equals salvage value

b. cash received plus accumulated depreciation equals original cost

Generally, a business removes a plant asset from use and disposes of it a. when a profit can be made on the disposal b. when the asset is three years old c. when the asset is no longer usable d. at the end of each fiscal year

c. when the asset is no longer usable

Revenue that results when a plant asset is sold for more than book value

gain on plant assets

Loss that results when a plant asset is sold for less than book value

loss on plant assets