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Masja [62]
3 years ago
12

On December 31, 2017, a company sells a plant asset that originally cost $375,000, receiving cash of $125,000. The accumulated d

epreciation account had a balance of $150,000 after the current year's depreciation of $37,500 had been recorded. The company should recognize a: ___________?
Business
1 answer:
CaHeK987 [17]3 years ago
4 0

Answer:

$100,000 loss on disposal

Explanation:

The current value (V) of the plant asset is the original $375,000 subtracted by the accumulated depreciation until the end of the current year,  $150,000:

V=\$375,000 -\$150,000 =\$225,000

The gain or loss from this transaction is measured by the amount received in cash subtracted by the current value of the plant asset:

\$125,000-\$225,000 = -\$100,000

Therefore, the company should recognize a $100,000 loss on disposal.

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