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- Oct 10, 2021
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Im having a hard time understanding the concept regarding on how to record the disposal of a fixed asset , specifically what accounts the transaction affects and why:
1.) Why do we remove the accumulated depreciation associated w/ the fixed asset?
2.) Why, when we get rid of the asset , we have to remove it using its original book value and not its net realizable value ?
3.) Why do we record the gain/ loss of the difference from the proceeds of the sale and the net realizable value of the asset ? why not get the difference from the proceed and the book value ?
4.) Why don't we record in the entry the effect that the transaction has on the net book value ? or is that effect represented by the gain/ loss we get from getting the difference from the proceeds of sale and the net book value?
1.) Why do we remove the accumulated depreciation associated w/ the fixed asset?
2.) Why, when we get rid of the asset , we have to remove it using its original book value and not its net realizable value ?
3.) Why do we record the gain/ loss of the difference from the proceeds of the sale and the net realizable value of the asset ? why not get the difference from the proceed and the book value ?
4.) Why don't we record in the entry the effect that the transaction has on the net book value ? or is that effect represented by the gain/ loss we get from getting the difference from the proceeds of sale and the net book value?
