A Gain or Loss on Disposal of a Plant Asset

question 10

Multiple Choice

A gain or loss on disposal of a plant asset is determined by comparing the

• A) replacement cost of the asset with the asset's original cost.
• B) book value of the asset with the asset's original cost.
• C) original cost of the asset with the proceeds received from its sale.
• D) book value of the asset with the proceeds received from its sale.

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Definitions:

Operating Income

Income generated from a company's primary business activities, excluding revenue and expenses from peripheral activities, interest, and taxes.

Investment Center

A business unit within an organization that is responsible for its own revenue, expenses, and investments, allowing it to be evaluated on its profit contributions and investment returns.

Profit Center

A branch or division of a company that is directly responsible for generating its own revenue and profits.

Fixed Assets

Long-term tangible assets, such as buildings, machinery, and equipment, used in the operation of a business and not expected to be consumed or converted into cash in the short term.