QUESTIONS ON HOW TO RECORD DISPOSAL OF ASSET


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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?
 
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BIG E

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1,2,3,4 - Why don't you take a bookkeeping or accounting course to find out the answers to your questions?
Part of the answer lies in the tax reporting rules.
 

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