Answer:
O increase by $48,000
Explanation:
A loss is made on disposal of an asset when the amount received from the disposal is lower than the carrying amount of the asset. The carrying amount or net book value of an asset is the difference between the cost of the asset and its accumulated depreciation.
Hence
Carrying amount = $75,000 - $20,000
= $55,000
Let the amount received on disposal be K
K - $55,000 = -$7,000
K = $55,000 - $7,000
= $48,000
This is the amount received from the disposal and it represents an increase in cash.
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