The accounting for disposal of a plant asset through retirement or sale as follows:
(a) Eliminate the book value of the plant asset at the date of disposal.
(b) Record cash proceeds, if any.
(c) Account for the difference between the book value and the cash proceeds as a gain or loss on disposal.
More from this Section
In addition to receiving the face value of a bond at maturity, an investor also receives periodic interest payments over the life of the bonds. These periodic payments...
- Direct labor
The work of factory employees that can be physically and directly associated with converting raw materials into finished goods is called direct labor.
- Cash receipts journal
Cash receipts journal refers to a special journal that records all cash received. The most common types of cash receipts are cash sales of merchandise and collections...
- Time ticket
The time ticket is a document that indicates the employee, the hours worked, the account and job to be charged, and the total labor cost.
- Accrued expenses
Expenses incurred but not yet paid or recorded at the statement date are accrued expenses. Interest, rent, taxes, and salaries are typical accrued expenses.
The largest intangible asset that appears on a company’s balance sheet is goodwill. Goodwill represents the value of all favorable attributes that relate to a company.
Depreciation is the process of allocating to expense the cost of a plant asset over its useful (service) life in a rational and systematic manner. It is a process of cost allocation...