Question

Gains on the sale of fixed assets are recorded with a credit and occur when the book value is ____

than the sales price. (Enter one word per blank.)

a) lower
b) less
c) smaller
d) lesser
e) below

Answer 1

Gains on the sale of fixed assets are recorded with a credit and occur when the book value is lower than the sales price.

Step-by-step explanation:

Gains on the sale of fixed assets are recorded with a credit and occur when the book value is lower than the sales price.

When a fixed asset is sold, the book value represents the asset's carrying value on the company's books. If the sales price is higher than the book value, it results in a gain. This gain is recorded as a credit in the accounting records.

For example, if a company sells a piece of equipment with a book value of $10,000 for $12,000, the gain on the sale would be $2,000. This $2,000 gain would be recorded as a credit in the accounting system.