Answer:
The correct option:The book value of the equipment is less than the value received
Explanation:
The gain on the disposal of an equipment will be recognized when the book value of the equipment which is the amount in which the equipment was bought is LESS or lower than the value received. Example if the book value of an equipment before disposal is $150,000 in which the equipment was later dispose off at the value of $200,000 which means that the amount of $200,000 will be the value or the amount that will be recognized because the book value amount of $150,000 is less than the value received which is $200,000 making us to have a gain of $50,000 on the Equipment which is calculated as:
Gain on disposal= Book value -Value received
Gain on disposal =$150,000-$200,000
Gain on disposal =$50,000 will be recognized
