Recording the Disposal of a Depreciable Non-Current Asset

What this note covers

1. Why Disposal Accounting Matters
2. Step 1 — Update Depreciation to the Date of Disposal
3. Steps 2 & 3 — Transferring Cost and Accumulated Depreciation to the Disposal Account
4. Step 4 — Recording the Proceeds of Disposal (Cash or Trade-In)
5. Step 5 — Closing the Disposal Account: Gain or Loss on Disposal
6. Fully Worked Example — Sale of a Delivery Van
7. Income Statement Presentation and Impact on the Accounting Equation

7 sections · 14 key terms & formulas · 6 common mistakes