Question

The entry to record the sale of a plant asset at a loss includes a credit to Accumulated Depreciation.

1) True
2) False

Answer 1

The statement is true; the entry to record the sale of a plant asset at a loss includes a credit to Accumulated Depreciation to remove the asset's historical cost and accumulated depreciation from the accounting records.

Step-by-step explanation:

The entry to record the sale of a plant asset at a loss does indeed include a credit . When a plant asset is sold, the company must remove the asset's cost and its accumulated depreciation from the books. If the sale proceeds are less than the book value of the asset (cost minus accumulated depreciation), the company recognizes a loss. The journal entry for this transaction typically involves:

1. Debiting Cash for the amount received from the sale,
2. Debiting Accumulated Depreciation for the total amount accumulated until the date of sale,
3. Debiting Loss on Sale of Plant Asset for the difference if the sale proceeds are less than the book value, and
4. Crediting the Plant Asset account for the original cost of the asset.

Therefore, the statement is

True