Question

Gains on the cash sales of property, plant, and equipment are:

1) recognized as revenue
2) recognized as expense
3) recognized as liability
4) recognized as asset

Answer 1

Gains on the cash sales of property, plant, and equipment are recognized as revenue.

Step-by-step explanation:

Gains on the cash sales of property, plant, and equipment are recognized as revenue. When a company sells its property, plant, or equipment for cash, the money received is considered a gain and is recorded as revenue on the company's income statement. This is because the company is generating income from the sale of its assets.

Answer 2

Gains from cash sales of property, plant, and equipment are recognized as revenue. These gains occur when an asset is sold for more than its book value and are reported in the income statement. Companies finance such asset purchases through methods like early-stage investment, reinvesting profits, borrowing, or selling stock.

Step-by-step explanation:

Gains on the cash sales of property, plant, and equipment are recognized as revenue. When a company sells an asset for more than its book value, the difference between the sale price and the book value is considered a gain, which is reported on the income statement as a revenue. It is not an expense, liability, or asset in itself but rather the result of the disposal of an asset that affects the income statement.

Companies often need to invest in long-term assets such as machinery, plants, or enter into research and development activities, expecting these investments to generate profits in the future. To finance these investments, companies can acquire capital through various means: early-stage investors, reinvesting profits, by borrowing through banks or bonds, or by selling stock.