Final answer:
When the carrying amount of an asset exceeds the sale proceeds, a loss occurs, reducing profit. False: the profit will not increase if carrying amount exceeds proceeds received.
Step-by-step explanation:
In the context of asset disposal, if the carrying amount of the asset exceeds the proceeds received from the sale, the difference is considered a loss, not a profit. Therefore, the accurate statement is: In a disposal of an asset, if the carrying amount of the asset exceeds the proceeds received, profit will not increase.
This scenario results in a loss on the sale of the asset, which reduces the overall profit of a company in its financial statements. To illustrate with an example, if a company sells a piece of equipment with a carrying amount of $10,000 for $7,000, it incurs a loss of $3,000, which would be deducted from the profit.