Question

I not clear on what happens when business assets are disposed of after being written off early. The accelerated depreciation gets rid of the salvage value of an asset on the books. The company still has the asset though. Can someone please expalin this.

Answer 1

In the books of accounts, business assets are written off on the basis of their useful life of asset.

But it is possible that even after the estimated useful life of is over, the asset is still in working condition and being used by the business even though it is written off in the books.

At the time of Sale: When such asset that has been fully written off in books in earlier years, are being sold of:

Then the total sale proceeds less the salvage value (if any) will be credited to the income statement and will be offered to tax in the year of sale as Profit from sale of asset.