If a Long-Lived Asset Is Sold Before It Is Fully

question 37

Multiple Choice

If a long-lived asset is sold before it is fully depreciated, and the proceeds received is less than the asset's carrying amount,

• A) a gain on disposal occurs.
• B) a loss on disposal occurs.
• C) there is no gain or loss on disposal.
• D) additional depreciation expense must be recorded.

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Definitions:

Price Floor

A government or regulatory imposed minimum price for goods or services, intended to prevent prices from falling too low.

Surplus

An excess of income or assets over expenditure or liabilities in a given period, typically referring to profit or a budgetary surplus.

Shortage

A market condition in which the demand for a product exceeds its supply at a particular price.

Market Price

The actual selling price of a good or service in the marketplace, determined by the forces of supply and demand.