USA Fixed asset disposal


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How is the disposal cost of a fixed asset recorded? Is the cost when paid recorded as an expense? What is the corresponding journal entry when the asset is disposed of?
 
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Triest123

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How is the disposal cost of a fixed asset recorded? Is the cost when paid recorded as an expense? What is the corresponding journal entry when the asset is disposed of?

Dr Gain/(loss) on Disposal
Cr Bank
Being paid for the disposal expense for selling the fixed asset


Selling price of the fixed asset XXX
Less : NBV of the fixed asset (XXX)
Less : Disposal expense (XXX)
Gain / (loss) on disposal XXX
 
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The Finance Writer

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Cost of the sale is part of the gain or loss from disposal.

First, you need to remove the asset from the books.
CR fixed assets
DR accumulated depreciation

The difference is more debit that reduces the gain caused by the sales proceeds, which is why you also have:
DR bank account (for the sales proceeds)
CR bank account (for separately paid disposal cost)
CR or DR to gain/loss from disposal (CR if a gain and DR if a loss)
 
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