Question

Net surplus/deficiency on disposal/replacement/discarding of an asset is credited/charged to ___________.

• A. Trading a/c
• B. Capital Reserve a/c
• C. Profit and loss a/c
• D. Revaluation a/c

Answer 1

The correct option is C Profit and loss a/c

Fixed assets are having its estimated working life too. Hence at the end of its working life or due to any other reasons, assets are being sold.

The net surplus/ deficiency on such sale/disposal of an asset should be credited or debited to the profit & loss account.

If the sale proceed exceeds the book value of the asset, there will be a profit which has to be credited to profit & loss account.

If the sale proceed is less than the book value of asset, there will be a loss which need to be debited to profit & loss account.