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How is the carrying amount of a non-current asset calculated on the date of its disposal?
ACost plus Accumulated Depreciation
BCash received minus Accumulated Depreciation
CCost minus residual value
DCost minus Accumulated Depreciation
Answer & Solution
Correct answer: D. Cost minus Accumulated Depreciation
1. The first step in any disposal is to find the asset's carrying amount.
2. Carrying amount = Cost (debit balance) − Accumulated Depreciation (credit balance).
3. This is then compared with the proceeds to find any gain or loss.
4. Option A adds rather than subtracts; option C confuses depreciable amount with carrying amount.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §4.7.1 "Disposal of Fixed Assets", p.160_
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