The disposal of a fixed asset refers to the process of removing a long-term asset from the company's asset due to selling, scrapping, donating, or written off the asset.
When a fixed asset is disposed of, it has a general overview of the accounting treatment for the disposal of a fixed asset:
| ACCOUNTING | OVERVIEW |
|---|---|
| Determine the book value | Book value is the original cost of the asset. If the asset has been fully depreciated, the book value may be zero. |
| Sales of asset | Record the cash received to identify gain or loss of disposal asset |
| Journal entries | Record the necessary journal entries to reflect the disposal by credit the asset account for its original cost, debit the accumulated depreciation account to eliminate its carrying value |
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