Practice prompt · Q:long-lived-asset-estimates-and-exits/disposal-gain-computation-001

Compute a disposal gain and place it

Tests whether the learner brings depreciation current before comparing proceeds with carrying amount.

Updated Aug 18, 2026 Review due Nov 18, 2026

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Skipping the partial-year depreciation is the common error, and it hides itself. The gain absorbs exactly the expense that was not recorded. Net income for the year is unchanged while both lines are wrong.

Choose the best answer. a Depreciation is recorded to the disposal date, then proceeds less the updated carrying amount gives the gain or loss, reported below operating income. b Proceeds less original cost gives the gain or loss. c Depreciation stops at the last year end, and proceeds are compared with the carrying amount at that date. d Proceeds less the updated carrying amount gives the gain, reported as revenue within operating income.

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Answer: a

Choice a. Update depreciation first, compare with proceeds, and present the result below operating income.