Selling a fixed asset
The van sold years from now: cost and accumulated depreciation leave together, and the difference from the price is a gain or a loss.
Sell the van. Its cost and every dollar of its depreciation leave the books together; the difference from the price is a gain.
| Account | Debit | Credit |
|---|---|---|
| 1000Cash — operating | 10,500.00 | |
| 1590Accumulated depreciation — vehicles | 15,000.00 | |
| 1500Vehicles | 24,000.00 | |
| 7100Gain on sale of assets | 1,500.00 | |
| Balanced | 25,500.00 | 25,500.00 |
The disposal. Cost and accumulated depreciation leave together; the gain is other income, not revenue.
Wrong
Dr Cash 10,500 Cr 4000 Revenue 10,500
Right
Dr Cash 10,500 Dr 1590 Accumulated depreciation 15,000 Cr 1500 Vehicles 24,000 Cr 7100 Gain on sale 1,500
Booking the proceeds as revenue overstates sales and leaves a van on the balance sheet the company no longer owns.
Where this lesson's rules come from
The sources behind this lesson's requirements, by kind. Anything marked as a convention is ours, not the rule-maker's.
- US GAAP
- ASC 360-10-35-4 (opens in a new tab)Depreciation allocates cost; it does not measure valueFree after registration
The full map is in US GAAP, and where these rules come from.
The words this page teaches
Each links to its glossary definition, which also names the authority behind it and the components that render it.
- Gain or loss on disposalProceeds from selling or scrapping a long-lived asset less its net book value on that date — presented outside revenue, with the asset's cost and accumulated depreciation removed together
- Net book valueCost less accumulated depreciation and impairment — the carrying amount of an asset
- Accumulated depreciationThe contra-asset holding every dollar of a fixed asset's cost already charged to depreciation — credited each period, presented beneath the asset's cost, and removed with the asset when it is sold or scrapped