Question

What is asset disposal account..???​

Answer 1

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When an asset is being sold, a new account in the name of “Asset Disposal Account” is created in the ledger. This account is primarily created to ascertain profit or loss on sale of fixed asset. The difference between amount received from sale proceeds and net current value of the fixed asset being disposed determines profit or loss. This amount is shown in the income statement.

.The account is termed as “Profit (or) Loss on sale of Asset”, If an asset is sold at a price higher than its written down value it is said to have produced profit. Similarly, if an asset is sold at a price lower than its written down value it is said to have incurred a loss.