Disposals & Accounting

Date: August 1, 2008
Time: 5:37 PM
Place: Kitchen

When a company disposes an operational asset through retirement, you simply credit the remaining value of the asset. If the asset hasn't fully depreciated, then you debit a loss for the remaining value.
When a company sales an operational asset, you have to look at the remaining book value of the asset and compare that to the cash being recieved. If their is a difference, then it will either be a gain or loss.
If operational assets are exchanged, then you compare the book value of the traded asset to the fair values of both assets exchanged. There may be a loss or gain depending on the difference between cash exchanged, the book value of the exchanged asset, and fair values of both assets.
Operational assets are the non-current assets of a firm that create revenue such as an oven in a bakery or the Coca-Cola symbol on a soda bottle. The two categories of operational assets are "Property, Plant, & Equipment" and "Intangibles."

These assets differ from other assets since they are not highly liquid- like inventory, and they're used during operations to- unlike long term investments in stocks.