How does selling a building for more than its book value affect the financial statements?

Selling a building for more than its book value creates a gain that is recognized on the income statement. When the sale price exceeds the recorded book value of the asset, the difference constitutes a gain from the transaction. This gain impacts net income positively, as it reflects additional revenue from the sale of the asset beyond what was originally invested in it or written down over time.

In financial accounting, when an asset is sold, the transaction is recorded in such a way that results in the gain being included in the net income for the period. This increase in income shows improved profitability and is favorable for stakeholders analyzing the company's financial performance.

The other options do not accurately reflect the effects of selling a building above its book value. For instance, the transaction definitely affects net income rather than having no impact on it. Also, while it reduces the total assets on the balance sheet due to the asset being sold, it does not inherently decrease liabilities, which mischaracterizes the financial movements resulting from such a sale.