A company sells a plant asset that originally cost $650000 for $270000 on December 31, 2022. The accumulated depreciation account had a balance of $260000 after the current year's depreciation of $65000 had been recorded. The company should recognize a $120000 loss on disposal. $120000 gain on disposal. $55000 loss on disposal. $380000 loss on disposal.
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
A company sells a plant asset that originally cost $650000 for $270000 on December 31, 2022. The
$120000 loss on disposal.
$120000 gain on disposal.
$55000 loss on disposal.
$380000 loss on disposal.
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