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:

Residual Income

The income that remains after all personal debts and expenses have been paid from one's net income.

Minimum Required Rate

The lowest acceptable return on investment required by an investor or manager.

Return On Investment

A measure of the profitability of an investment, calculated as the ratio of net returns to the initial capital cost.

Unit Sales

The total number of individual items or units sold by a company during a specific period, a key metric in assessing a company’s sales performance.