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13 October, 19:10

2. If a plant asset costs $6,000.00, has accumulated depreciation of $5,000.00, and is sold for $1,200.00, the gain or loss on disposal is a (A) $1,200.00 gain. (B) $5,000.00 loss. (C) $200.00 gain. (D) $200.00 loss.

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  1. 13 October, 20:27
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    (C) $200.00 gain

    Explanation:

    The gain or loss on sale of fixed asset is calculated as follows:

    Gain/Loss = Sale Price - (Cost of asset - Accumulated Depreciation)

    If the value is positive it is gain and if the value is negative it is loss.

    Here, we are provided that cost of asset = $6,000

    Accumulated Depreciation = $5,000

    And selling Price = $1,200

    Thus, Gain/Loss = $1,200 - ($6,000 - $5,000)

    = $1,200 - $1,000 = $200

    As the value is positive that is selling price is more than carrying value of the asset there is a gain of $200

    Thus, the correct option is

    (C) $200.00 gain
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