A company sells a plant asset that originally cost $300000 for $115000 on December 31, 2022. The accumulated depreciation account had a balance of $120000 after the current year's depreciation of $30000 had been recorded. The company should recognize a $65000 loss on disposal. O $65000 gain on disposal. O $35000 loss on disposal. O $185000 loss on disposal.
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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