Which of the following statements is correct? Group of answer choices A gain or loss on disposal of a plant asset is determined by comparing the book value of the asset with the proceeds received from its sale The book value of a plant asset is the difference between the cost of the asset and the amount of depreciation expense for the year The book value of a plant asset is the difference between the proceeds received from the sale of the asset and its original cost A gain or loss on disposal of a plant asset is determined by comparing the replacement cost of the asset with the asset's original cost A gain or loss on disposal of a plant asset is determined by comparing the book value of the asset with the asset's original cost

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Answer:

A gain or loss on disposal of a plant asset is determined by comparing the book value of the asset with the proceeds received from its sale

Explanation:

Gain or loss on disposal is presented in the Income Statement as follows:

Gain = Other Income

Loss = Increases Expenses

Gain or loss on disposal

Gain or loss on disposal = Proceeds - Book Value of Asset

Book Value of Asset

Book Value of Asset = Original Cost of Asset - Accumulated Depreciation up to date of Sale of the Asset.