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14 December, 00:52

A company sells a plant asset which originally cost $360,000 for $120,000 on December 31, 2015. The Accumulated Depreciation account had a balance of $144,000 after the current year's depreciation of $36,000 had been recorded. The company should recognize a A. $60,000 loss on disposal. B. $96,000 loss on disposal. C. $240,000 loss on disposal. D. $96,000 gain on disposal.

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  1. 14 December, 04:32
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    96,000 loss on disposal

    Explanation:

    Data provided:

    The cost of plant assets = $ 360,000

    Selling value of the plant assets = $ 120,000

    Accumulated Depreciation = $ 144,000

    Therefore,

    the net book value of the plant assets = Total cost of the plant - the depreciation

    or

    the net book value of the plant assets = $ 360,000 - $ 144,000 = $216,000

    since, the net book value is more than the selling price

    Therefore, the loss on disposal = Book value - selling cost

    = $216,000 - $ 120,000

    or

    the loss = $ 96,000

    hence, the option B is the correct answer i. e $ 96,000 loss on disposal
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