Disposal

Question 1

what is disposal?

Answer 1

Asset disposal is the removal of a long-term asset from the company’s accounting records.

Question 2

what are the 5 steps of disposal

Answer 2

1. depreciate the asset for that part of the current accounting period for which the asset has been used
2. transfer the cost of the asset sold from the asset account to the disposal account
3. transfer any depreciation that has accumulated on the asset sold from the accumulated depreciation account to the disposal account
4. record the disposal price of the asset in the disposal account
5. determine wether a gain or loss has been made on the disposal of the asset. This gain or loss would be shown in a gain or loss on Disposal Account