Disposal of PP&E
Selling, Retiring & Exchanging Assets
When a company disposes of PP&E, accumulated depreciation is removed along with the asset's cost. Any difference between proceeds received and the asset's carrying amount results in a gain or loss.
Gain (Loss) = Proceeds Received − Carrying Amount
- Update depreciation before disposal.
- Remove asset cost and accumulated depreciation.
- Recognize gain or loss.
- Record cash received, if applicable.
Summary
Disposal accounting removes the asset from the books and recognizes any resulting gain or loss.