If a plant asset is sold before it is fully depreciated only

If a plant asset is sold before it is fully depreciated, only a gain on disposal can occur. only a loss on disposal can occur. either a gain or a loss can occur. neither a gain nor a loss can occur.

Solution

When an asset is sold before it is fully depreciated;the book value as on date of sale would be calculated as:

Book value as on date of sale=Cost-Accumulated depreciation.

Hence if the sale proceeds are higher than the book value as on date of sale;there would be a gain and if the sale proceeds are lower than the book value as on date of sale;there would be a loss.

Hence the correct option is C.