Acompany sells a plant asset that originally cost $150,000 for $50,000 on december 31, 2007. the accumulated depreciation account had a balance of $60,000 after the current year's depreciation of $15,000 had been recorded. the company should recognize a
a. $100,000 loss on disposal.
b. $40,000 gain on disposal.
c. $40,000 loss on disposal.
d. $25,000 loss on disposal.

Option (C) is correct.

Explanation:

Net book value as on 31st Dec 2007:

= Cost of Assets - Accumulated Depreciation

= $150,000 - $60,000

= $90,000

Loss from sale of asset:

= Net book value as on 31st Dec 2007 - Amount realised after sale of asset

= $90,000 - $50,000

= $40,000

Therefore, the company should recognize a $40,000 loss on disposal.

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