Question

1. how is a gain on disposal calculated? 2. how is a loss on disposal calculated?

1. how is a gain on disposal calculated?
2. how is a loss on disposal calculated?
Business   Accounting   
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Homework Answers

Answer #1
  • Make sure that the depreciation until the date of sale of the asset is recorded.
  • Calculate the book value of the asset(s) sold.

Book value of the asset sold = Cost of the asset - Accumulated depreciation until the date of sale

  • Calculate the gain or loss on the disposal

How is a gain on disposal calculated?

When the sale value of the asset sold is more than the book value of the asset, the result would be a gain on the disposal.

Gain on disposal = Sale value of the asset sold - Book value of the asset sold

.

How is a loss on disposal calculated?

When the sale value of the asset sold is less than the book value of the asset, the result would be a loss on the disposal.

Loss on disposal = Book value of the asset sold - Sale value of the asset sold

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