# How do I record it in the books when I sell, scrap, or trade in a piece of equipment or a vehicle?

- **[United States · companies selling a long-term depreciable asset]** Where an asset is sold, the company must account for the asset's depreciation up to the date of sale. → [CG-MCE-072#S05](#s-CG-MCE-072-S05)
- **[United States · companies selling a long-term depreciable asset]** After the asset's net book value has been brought current, the company must determine whether the asset sold at a gain, at a loss, or at book value. → [CG-MCE-072#S01](#s-CG-MCE-072-S01)
- **[United States · Business entities that maintain accounting records for fixed assets (article's illustration is a corporation)]** For the disposal cases just illustrated (sale to a third party, gift to an employee, or discard), the article states the asset record must be removed from the accounting system together with all related accumulated depreciation - i.e. both the asset record and its accumulated depreciation come off. → [CG-MCE-072#S09](#s-CG-MCE-072-S09)
- **[United States · Business entities that maintain accounting records for fixed assets (article's illustration is a corporation)]** The article states that where the asset was sold, any realized gain or loss must also be recorded, in addition to removing the asset record and accumulated depreciation. → [CG-MCE-072#S10](#s-CG-MCE-072-S10)
- **[United States (FASB standard; U.S. generally accepted accounting principles) · Long-lived assets (disposal groups) classified as held for sale that are not a component of an entity · U.S. GAAP]** A gain or loss recognized for a long-lived asset (disposal group) classified as held for sale that is not a component of an entity must be included in income from continuing operations before income taxes in the income statement of a business enterprise, and in income from continuing operations in the statement of activities of a not-for-profit organization. → [CG-MCE-072#S23](#s-CG-MCE-072-S23)

## What this page establishes

- The accounting rule behind removing a disposed asset — Partly established
- The rule on depreciating up to the disposal date — Partly established
- How the federal tax rules treat a trade-in — Not established
- The records the tax rules require you to keep — Not established
- How the tax gain or loss and depreciation recovery are measured — Partly established
- The accounting rule for a trade-in exchange — Partly established
- Register, ledger and authorisation controls around a disposal — Not established (Required authority: authoritative professional or accounting standard. Highest achieved: high quality professional secondary reference, primary regulator or government.)
- First work out what the asset was worth on your books — Partly established (Required authority: authoritative professional or accounting standard. Highest achieved: high quality professional secondary reference.)
- Bring depreciation up to the day the asset left — Partly established
- The entry that takes the asset off the books — Partly established
- Sold, scrapped or traded in — how the entry changes — Partly established
- What a trade-in credit does to the replacement's cost — Not established
- Where the gain or loss belongs on the profit and loss — Partly established
- If a loan or lease is still against the asset — Established
- Take it off the asset register and re-tie the register to the ledger — Partly established (Required authority: authoritative professional or accounting standard. Highest achieved: high quality professional secondary reference.)
- The paperwork to get and keep — and who approves the disposal first — Not established (Required authority: authoritative professional or accounting standard, primary regulator or government. Highest achieved: high quality professional secondary reference, primary regulator or government.)
- What to hand to your tax preparer rather than work out yourself — Partly established
- Given away, taken by the owner, or lost and written off — Partly established

## First work out what the asset was worth on your books
<a id="need-CG-MCE-072-P1"></a>

- <a id="s-CG-MCE-072-S01"></a>After the asset's net book value has been brought current, the company must determine whether the asset sold at a gain, at a loss, or at book value. _(jurisdiction: United States, entity_scope: companies selling a long-term depreciable asset, conditions: after the net book value has been brought current)_ `CG-MCE-072#S01`
  > “After ensuring that the net book value of an asset is current, the company must determine if the asset has sold at a gain, at a loss, or at book value.” — [OpenStax, Rice University — Principles of Accounting, Volume 1: Financial Accounting — 11.5 Describe Some Special Issues in Accounting for Long-Term Assets](https://openstax.org/books/principles-financial-accounting/pages/11-5-describe-some-special-issues-in-accounting-for-long-term-assets), 2026-04-23; §11.5 Describe Some Special Issues in Accounting for Long-Term Assets — heading “Sale of an Asset”, first paragraph, sentence 3. Verified 2026-09-09.

- <a id="s-CG-MCE-072-S02"></a>In the illustration, the asset's book value at the disposal date is its original cost of $58,000 less accumulated depreciation of $28,800, giving $29,200. _(jurisdiction: United States, entity_scope: illustrative example — Kenzie Company printing press, conditions: original cost $58,000; accumulated depreciation $28,800 at the end of year three)_ `CG-MCE-072#S02`
  > “With an original cost of $58,000, and after subtracting the accumulated depreciation of $28,800, the press would have a book value of $29,200.” — [OpenStax, Rice University — Principles of Accounting, Volume 1: Financial Accounting — 11.5 Describe Some Special Issues in Accounting for Long-Term Assets](https://openstax.org/books/principles-financial-accounting/pages/11-5-describe-some-special-issues-in-accounting-for-long-term-assets), 2026-04-23; §11.5 Describe Some Special Issues in Accounting for Long-Term Assets — heading “Sale of an Asset”, second paragraph (Kenzie Company worked example). Verified 2026-09-09.

- <a id="s-CG-MCE-072-S03"></a>In the article's example, giving the machine away after eight years leaves $20,000 of the $100,000 original cost not yet depreciated, and an entry is recorded for that; the undepreciated remainder is computed as original cost less depreciation taken to date. _(jurisdiction: United States, entity_scope: Business entities that maintain accounting records for fixed assets (article's illustration is a corporation), conditions: illustrative example only)_ `CG-MCE-072#S03`
  > “To use the same example, ABC Corporation gives away the machine after eight years, when it has not yet depreciated $20,000 of the asset's original $100,000 cost. In this case, ABC records the following entry:” — [AccountingTools, Inc. (author Steven Bragg) — Fixed asset disposal accounting](https://www.accountingtools.com/articles/fixed-asset-disposal-accounting), 2026-05-22; Section 'Example of a Fixed Asset Disposal', second paragraph (the 'variation on the first situation'). Verified 2026-09-09.

_Partly established. Established: the difference between them as the carrying amount at the disposal date, before any entry is made (S02, S03). Missing: the asset's original cost from the register; the accumulated depreciation to date from the register._

_Required authority: authoritative professional or accounting standard. Highest achieved: high quality professional secondary reference._

## Bring depreciation up to the day the asset left
<a id="need-CG-MCE-072-P2"></a>

- <a id="s-CG-MCE-072-S05"></a>Where an asset is sold, the company must account for the asset's depreciation up to the date of sale. _(jurisdiction: United States, entity_scope: companies selling a long-term depreciable asset, conditions: applies when a long-term asset is sold)_ `CG-MCE-072#S05`
  > “When an asset is sold, the company must account for its depreciation up to the date of sale.” — [OpenStax, Rice University — Principles of Accounting, Volume 1: Financial Accounting — 11.5 Describe Some Special Issues in Accounting for Long-Term Assets](https://openstax.org/books/principles-financial-accounting/pages/11-5-describe-some-special-issues-in-accounting-for-long-term-assets), 2026-04-23; §11.5 Describe Some Special Issues in Accounting for Long-Term Assets — heading “Sale of an Asset”, first paragraph, sentence 1. Verified 2026-09-09.

- <a id="s-CG-MCE-072-S06"></a>Because depreciation must be accounted for up to the date of sale, companies may be required to record a depreciation entry before the sale so that depreciation is current; the text states this as a possibility, not as an entry that is always needed. _(jurisdiction: United States, entity_scope: companies selling a long-term depreciable asset, conditions: where depreciation recorded to date is not already current at the sale date)_ `CG-MCE-072#S06`
  > “This means companies may be required to record a depreciation entry before the sale of the asset to ensure it is current.” — [OpenStax, Rice University — Principles of Accounting, Volume 1: Financial Accounting — 11.5 Describe Some Special Issues in Accounting for Long-Term Assets](https://openstax.org/books/principles-financial-accounting/pages/11-5-describe-some-special-issues-in-accounting-for-long-term-assets), 2026-04-23; §11.5 Describe Some Special Issues in Accounting for Long-Term Assets — heading “Sale of an Asset”, first paragraph, sentence 2. Verified 2026-09-09.

- <a id="s-CG-MCE-072-S07"></a>A long-lived asset must not be depreciated (amortized) while it is classified as held for sale, while interest and other expenses attributable to the liabilities of a disposal group classified as held for sale must continue to be accrued. _(jurisdiction: United States (FASB standard; U.S. generally accepted accounting principles), entity_scope: Long-lived assets (disposal groups) within the scope of FAS 144, classified as held for sale, accounting_basis: U.S. GAAP, effective_from: fiscal years beginning after December 15, 2001)_ `CG-MCE-072#S07`
  > “A long-lived asset shall not be depreciated (amortized) while it is classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale shall continue to be accrued.” — [Financial Accounting Standards Board — Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets](https://storage.fasb.org/fas144.pdf), 2001-08; Long-Lived Assets to Be Disposed Of by Sale, Measurement, paragraph 34, page 15. Verified 2026-09-09.

- <a id="s-CG-MCE-072-S08"></a>Where property is sold or otherwise disposed of before the end of its recovery period, the depreciation deduction for the year of the disposition is only part of the full-year depreciation amount; property is disposed of when it is permanently withdrawn from use in the business or income-producing activity because of its sale, exchange, retirement, abandonment, involuntary conversion, or destruction. _(jurisdiction: United States (federal income tax; publication of the IRS, U.S. Department of the Treasury), entity_scope: Taxpayers depreciating business or income-producing property for U.S. federal income tax purposes, accounting_basis: U.S. federal income tax (Internal Revenue Code), not financial reporting, effective_from: 2025 tax year - edition is 'for use in preparing 2025 Returns', conditions: disposal before the end of the property's recovery period)_ `CG-MCE-072#S08`
  > “If you sell or otherwise dispose of your property before the end of its recovery period, your depreciation deduction for the year of the disposition will be only part of the depreciation amount for the full year. You have disposed of your property if you have permanently withdrawn it from use in your business or income-producing activity because of its sale, exchange, retirement, abandonment, involuntary conversion, or destruction.” — [Internal Revenue Service, U.S. Department of the Treasury — Publication 946 (2025), How To Depreciate Property](https://www.irs.gov/publications/p946), 2025 edition - 'For use in preparing 2025 Returns'; Chapter 4, Figuring Depreciation Under MACRS > 'Sale or Other Disposition Before the Recovery Period Ends'. Verified 2026-09-09.

_Partly established. Established: depreciation must be brought up to the disposal date before the asset is removed (S05). Missing: what convention governs the amount for the final part-period._

## The entry that takes the asset off the books
<a id="need-CG-MCE-072-P3"></a>

- <a id="s-CG-MCE-072-S09"></a>For the disposal cases just illustrated (sale to a third party, gift to an employee, or discard), the article states the asset record must be removed from the accounting system together with all related accumulated depreciation - i.e. both the asset record and its accumulated depreciation come off. _(jurisdiction: United States, entity_scope: Business entities that maintain accounting records for fixed assets (article's illustration is a corporation), conditions: applies to the disposal cases the article has just listed (sold to a third party, given to an employee, or thrown in the trash))_ `CG-MCE-072#S09`
  > “In these cases, the asset record must be removed from the accounting system, along with all related accumulated depreciation.” — [AccountingTools, Inc. (author Steven Bragg) — Fixed asset disposal accounting](https://www.accountingtools.com/articles/fixed-asset-disposal-accounting), 2026-05-22; Untitled opening paragraph under the article title 'Fixed asset disposal accounting' (dated May 22, 2026), before the heading 'How to Account for a Fixed Asset Disposal'. Verified 2026-09-09.

- <a id="s-CG-MCE-072-S10"></a>The article states that where the asset was sold, any realized gain or loss must also be recorded, in addition to removing the asset record and accumulated depreciation. _(jurisdiction: United States, entity_scope: Business entities that maintain accounting records for fixed assets (article's illustration is a corporation), conditions: only where the asset was sold)_ `CG-MCE-072#S10`
  > “If the asset was sold, then any realized gain or loss must also be recorded.” — [AccountingTools, Inc. (author Steven Bragg) — Fixed asset disposal accounting](https://www.accountingtools.com/articles/fixed-asset-disposal-accounting), 2026-05-22; Untitled opening paragraph under the article title 'Fixed asset disposal accounting' (dated May 22, 2026), before the heading 'How to Account for a Fixed Asset Disposal'. Verified 2026-09-09.

- <a id="s-CG-MCE-072-S12"></a>A gain or loss not previously recognized that results from the sale of a long-lived asset (disposal group) must be recognized at the date of sale. _(jurisdiction: United States (FASB standard; U.S. generally accepted accounting principles), entity_scope: Long-lived assets (disposal groups) within the scope of FAS 144, classified as held for sale, accounting_basis: U.S. GAAP, effective_from: fiscal years beginning after December 15, 2001)_ `CG-MCE-072#S12`
  > “A gain or loss not previously recognized that results from the sale of a long-lived asset (disposal group) shall be recognized at the date of sale.” — [Financial Accounting Standards Board — Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets](https://storage.fasb.org/fas144.pdf), 2001-08; Long-Lived Assets to Be Disposed Of by Sale, Measurement, paragraph 37, page 15. Verified 2026-09-09.

_Partly established. Established: derecognising cost (S09, S14, S31, S32); derecognising accumulated depreciation (S09, S14, S31, S32); recognising the difference as a gain or a loss (S10, S12, S49). Missing: recording the consideration received._

## Sold, scrapped or traded in — how the entry changes
<a id="need-CG-MCE-072-P4"></a>

- <a id="s-CG-MCE-072-S13"></a>A long-lived asset to be disposed of other than by sale - the examples given being abandonment, an exchange for a similar productive long-lived asset, or a distribution to owners in a spinoff - must continue to be classified as held and used until it is disposed of, and paragraphs 7-26 apply while it is so classified. _(jurisdiction: United States (FASB standard; U.S. generally accepted accounting principles), entity_scope: Long-lived assets within the scope of FAS 144 to be disposed of other than by sale, accounting_basis: U.S. GAAP, effective_from: fiscal years beginning after December 15, 2001)_ `CG-MCE-072#S13`
  > “A long-lived asset to be disposed of other than by sale (for example, by abandonment, in an exchange for a similar productive long-lived asset, or in a distribution to owners in a spinoff) shall continue to be classified as held and used until it is disposed of. Paragraphs 7–26 shall apply while the asset is classified as held and used.” — [Financial Accounting Standards Board — Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets](https://storage.fasb.org/fas144.pdf), 2001-08; Long-Lived Assets to Be Disposed Of Other Than by Sale, paragraph 27, page 12. Verified 2026-09-09.
  _Flagged for professional review — a bookkeeper or accountant should confirm this applies to your situation._

- <a id="s-CG-MCE-072-S14"></a>For a disposal with no payment received, the article directs that any accumulated depreciation be reversed and the original asset cost be reversed. _(jurisdiction: United States, entity_scope: Business entities that maintain accounting records for fixed assets (article's illustration is a corporation), conditions: disposal in which no payment is received in return)_ `CG-MCE-072#S14`
  > “In this case, reverse any accumulated depreciation and reverse the original asset cost.” — [AccountingTools, Inc. (author Steven Bragg) — Fixed asset disposal accounting](https://www.accountingtools.com/articles/fixed-asset-disposal-accounting), 2026-05-22; Section 'How to Account for a Fixed Asset Disposal', first (and only) paragraph of that section. Verified 2026-09-09.
  _Flagged for professional review — a bookkeeper or accountant should confirm this applies to your situation._

- <a id="s-CG-MCE-072-S15"></a>The article's second disposal scenario is a sale, in which cash or some other asset is received in exchange for the sold asset - the consideration need not be cash. _(jurisdiction: United States, entity_scope: Business entities that maintain accounting records for fixed assets (article's illustration is a corporation))_ `CG-MCE-072#S15`
  > “The second scenario arises when you sell an asset, so that you receive cash (or some other asset) in exchange for the sold asset.” — [AccountingTools, Inc. (author Steven Bragg) — Fixed asset disposal accounting](https://www.accountingtools.com/articles/fixed-asset-disposal-accounting), 2026-05-22; Section 'Example of a Fixed Asset Disposal', third paragraph (the 'second scenario'). Verified 2026-09-09.
  _Flagged for professional review — a bookkeeper or accountant should confirm this applies to your situation._

- <a id="s-CG-MCE-072-S16"></a>A sale is a transfer of property for money or a mortgage, note, or other promise to pay money, while an exchange is a transfer of property for other property or services. _(jurisdiction: United States (federal income tax administered by the IRS), entity_scope: taxpayers disposing of property; the publication states its discussions refer mainly to individuals, though many of the rules also apply to taxpayers other than individuals, accounting_basis: U.S. federal income tax, effective_from: 2025 tax year, effective_to: 2025 tax year)_ `CG-MCE-072#S16`
  > “A sale is a transfer of property for money or a mortgage, note, or other promise to pay money. An exchange is a transfer of property for other property or services.” — [Internal Revenue Service, U.S. Department of the Treasury — Publication 544 (2025), Sales and Other Dispositions of Assets](https://www.irs.gov/publications/p544), 2026-04-30; Chapter 1. Gain or Loss > Sales and Exchanges. Verified 2026-09-09.
  _Flagged for professional review — a bookkeeper or accountant should confirm this applies to your situation._

- <a id="s-CG-MCE-072-S17"></a>Abandonment of property is a disposition of property, occurring where possession and use are voluntarily and permanently given up with the intention of ending ownership but without passing the property on to anyone else, and abandonment is generally not treated as a sale or exchange. _(jurisdiction: United States (federal income tax administered by the IRS), entity_scope: taxpayers disposing of property; the publication states its discussions refer mainly to individuals, though many of the rules also apply to taxpayers other than individuals, accounting_basis: U.S. federal income tax, effective_from: 2025 tax year, effective_to: 2025 tax year)_ `CG-MCE-072#S17`
  > “The abandonment of property is a disposition of property. You abandon property when you voluntarily and permanently give up possession and use of the property with the intention of ending your ownership but without passing it on to anyone else. Generally, abandonment is not treated as a sale or exchange of the property.” — [Internal Revenue Service, U.S. Department of the Treasury — Publication 544 (2025), Sales and Other Dispositions of Assets](https://www.irs.gov/publications/p544), 2026-04-30; Chapter 1. Gain or Loss > Abandonments. Verified 2026-09-09.
  _Flagged for professional review — a bookkeeper or accountant should confirm this applies to your situation._

_Partly established. Established: how the entry changes for a sale with proceeds (S10); how the entry changes for a scrap or abandonment with no proceeds (S14). Missing: how the entry changes for a trade-in where the consideration is a credit rather than money._

## What a trade-in credit does to the replacement's cost
<a id="need-CG-MCE-072-P5"></a>

- <a id="s-CG-MCE-072-S18"></a>The guidance in APB Opinion 29 is based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. _(jurisdiction: United States, entity_scope: enterprises applying APB Opinion 29 to exchanges of nonmonetary assets, accounting_basis: U.S. generally accepted accounting principles (U.S. GAAP))_ `CG-MCE-072#S18`
  > “The guidance in APB Opinion No. 29, Accounting for Nonmonetary Transactions, is
based on the principle that exchanges of nonmonetary assets should be measured based
on the fair value of the assets exchanged.” — [Financial Accounting Standards Board — Statement of Financial Accounting Standards No. 153, Exchanges of Nonmonetary Assets — an amendment of APB Opinion No. 29](https://storage.fasb.org/fas153.pdf), 2004-12; Summary (first paragraph). Verified 2026-09-09.
  _Flagged for professional review — a bookkeeper or accountant should confirm this applies to your situation._

- <a id="s-CG-MCE-072-S19"></a>Some exchanges of nonmonetary assets involve a small monetary consideration, referred to as “boot,” even though the exchange is essentially nonmonetary, and Opinion 29 also applies to those transactions. _(jurisdiction: United States, entity_scope: enterprises applying Opinion 29 as amended by this Statement to essentially nonmonetary exchanges that include a small monetary consideration (boot), accounting_basis: U.S. generally accepted accounting principles (U.S. GAAP), effective_from: fiscal periods beginning after June 15, 2005)_ `CG-MCE-072#S19`
  > “Some
exchanges of nonmonetary assets involve a small monetary consideration,
referred to as “boot,” even though the exchange is essentially nonmonetary. This
Opinion also applies to those transactions.” — [Financial Accounting Standards Board — Statement of Financial Accounting Standards No. 153, Exchanges of Nonmonetary Assets — an amendment of APB Opinion No. 29](https://storage.fasb.org/fas153.pdf), 2004-12; Standards of Financial Accounting and Reporting — Amendments to Opinion 29, paragraph 2.b (amended text of Opinion 29 paragraph 4). Verified 2026-09-09.
  _Flagged for professional review — a bookkeeper or accountant should confirm this applies to your situation._

- <a id="s-CG-MCE-072-S21"></a>Where property is received in exchange for other property in a taxable exchange, the basis of the property received is usually its FMV at the time of the exchange; a taxable exchange occurs when the taxpayer receives cash or property not similar or related in use to the property exchanged. _(jurisdiction: United States (federal income tax), entity_scope: Taxpayers receiving property in a taxable exchange, accounting_basis: U.S. federal income tax (basis of property))_ `CG-MCE-072#S21`
  > “If you receive property in exchange for other property in a taxable exchange, the basis of property you receive is usually its FMV at the time of the exchange. A taxable exchange occurs when you receive cash or property not similar or related in use to the property exchanged.” — [Internal Revenue Service, U.S. Department of the Treasury — Publication 551 (12/2025), Basis of Assets](https://www.irs.gov/publications/p551), 2025-12; Publication 551 - Main Contents > Basis Other Than Cost > Taxable Exchanges. Verified 2026-09-09.
  _Flagged for professional review — a bookkeeper or accountant should confirm this applies to your situation._

- <a id="s-CG-MCE-072-S22"></a>Where the assets surrendered in an acquisition of assets are nonfinancial assets or in substance nonfinancial assets within the scope of Subtopic 610-20, those surrendered assets must be derecognised in accordance with Subtopic 610-20 and the assets acquired must be treated as noncash consideration under Subtopic 610-20. _(jurisdiction: United States (U.S. GAAP as codified by the FASB, applicable to nongovernmental entities), entity_scope: all entities applying U.S. GAAP; acquisitions of assets rather than a business in which nonfinancial assets are surrendered, accounting_basis: U.S. GAAP (FASB Accounting Standards Codification))_ `CG-MCE-072#S22`
  > “However, if the assets surrendered are nonfinancial assets or in substance nonfinancial assets within the scope of Subtopic 610-20 on gains and losses from the derecognition of nonfinancial assets, the assets surrendered shall be derecognized in accordance with the guidance in Subtopic 610-20 and the assets acquired shall be treated as noncash consideration in accordance with Subtopic 610-20.” — [Financial Accounting Standards Board — Accounting Standards Update No. 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets](https://storage.fasb.org/ASU_2017-05.pdf), 2017-02; Amendments to Subtopic 805-50, item 21 — amended paragraph 805-50-25-1, 'Business Combinations—Related Issues > Recognition > Acquisition of Assets Rather than a Business'; printed page 32. Verified 2026-09-09.
  _Flagged for professional review — a bookkeeper or accountant should confirm this applies to your situation._

_Not established from an authoritative source._

## Where the gain or loss belongs on the profit and loss
<a id="need-CG-MCE-072-P6"></a>

- <a id="s-CG-MCE-072-S23"></a>A gain or loss recognized for a long-lived asset (disposal group) classified as held for sale that is not a component of an entity must be included in income from continuing operations before income taxes in the income statement of a business enterprise, and in income from continuing operations in the statement of activities of a not-for-profit organization. _(jurisdiction: United States (FASB standard; U.S. generally accepted accounting principles), entity_scope: Long-lived assets (disposal groups) classified as held for sale that are not a component of an entity, accounting_basis: U.S. GAAP, effective_from: fiscal years beginning after December 15, 2001)_ `CG-MCE-072#S23`
  > “A gain or loss recognized for a long-lived asset (disposal group) classified as held for sale that is not a component of an entity shall be included in income from continuing operations before income taxes in the income statement of a business enterprise and in income from continuing operations in the statement of activities of a not-for-profit organization.” — [Financial Accounting Standards Board — Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets](https://storage.fasb.org/fas144.pdf), 2001-08; Reporting Disposal Gains or Losses in Continuing Operations, paragraph 45, page 17. Verified 2026-09-09.

- <a id="s-CG-MCE-072-S24"></a>A gain or loss recognized on the disposal must be disclosed either on the face of the income statement or in the notes to the financial statements. _(jurisdiction: United States (FASB standard; U.S. generally accepted accounting principles), entity_scope: Components of an entity reported in discontinued operations, accounting_basis: U.S. GAAP, effective_from: fiscal years beginning after December 15, 2001)_ `CG-MCE-072#S24`
  > “A gain or loss recognized on the disposal shall be disclosed either on the face of the income statement or in the notes to the financial statements (paragraph 47(b)).” — [Financial Accounting Standards Board — Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets](https://storage.fasb.org/fas144.pdf), 2001-08; Reporting Long-Lived Assets and Disposal Groups to Be Disposed Of, Reporting Discontinued Operations, paragraph 43, page 17. Verified 2026-09-09.

- <a id="s-CG-MCE-072-S25"></a>In the Board's reasoning about real estate sales, recognition and measurement should be the same whether or not the buyer is a customer, and the only difference should relate to presentation of the profit or loss in the statement of comprehensive income: profit (loss) on a sale to a customer should be presented as revenue (expense), whereas profit (loss) on a sale to a noncustomer should be presented as a gain (loss). _(jurisdiction: United States (U.S. GAAP as codified by the FASB, applicable to nongovernmental entities), entity_scope: all entities applying U.S. GAAP; sales of real estate, accounting_basis: U.S. GAAP (FASB Accounting Standards Codification), conditions: Board's stated reasoning in the Basis for Conclusions, which the Update states is not authoritative Codification text)_ `CG-MCE-072#S25`
  > “The Board decided that because there is little economic difference between the sale of real estate to a customer and the sale of real estate to a noncustomer, the recognition and measurement guidance should be the same and the only difference should 58 relate to the presentation of the profit or loss in the statement of comprehensive income. That is, the profit (loss) on the sale of real estate to a customer should be presented as revenue (expense), whereas the profit (loss) on the sale of real estate to a noncustomer should be presented as a gain (loss).” — [Financial Accounting Standards Board — Accounting Standards Update No. 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets](https://storage.fasb.org/ASU_2017-05.pdf), 2017-02; Background Information and Basis for Conclusions, paragraph BC4; printed pages 58-59. Verified 2026-09-09.

- <a id="s-CG-MCE-072-S26"></a>Subtopic 610-20 points to paragraph 360-10-45-5 for guidance on presenting a gain or loss recognised on the sale of a long-lived asset (disposal group). _(jurisdiction: United States (U.S. GAAP as codified by the FASB, applicable to nongovernmental entities), entity_scope: all entities applying U.S. GAAP; sale of a long-lived asset (disposal group), accounting_basis: U.S. GAAP (FASB Accounting Standards Codification))_ `CG-MCE-072#S26`
  > “See paragraph 360-10-45-5 for guidance on presentation of a gain or loss recognized on the sale of a long-lived asset (disposal group).” — [Financial Accounting Standards Board — Accounting Standards Update No. 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets](https://storage.fasb.org/ASU_2017-05.pdf), 2017-02; Amendments to Subtopic 610-20, item 9 — paragraph 610-20-45-1, 'Other Presentation Matters'; printed page 20. Verified 2026-09-09.

_Partly established. Established: where the gain or loss belongs on the profit and loss (S23). Missing: why the amount received for equipment is not recorded as revenue._

## If a loan or lease is still against the asset
<a id="need-CG-MCE-072-P7"></a>

- <a id="s-CG-MCE-072-S27"></a>FAS 144 does not change the generally accepted accounting principles applicable to other individual assets and liabilities that are not covered by the Statement but are included in an asset group or disposal group; the examples of such liabilities given include accounts payable, long-term debt and asset retirement obligations. _(jurisdiction: United States (FASB standard; U.S. generally accepted accounting principles), entity_scope: Assets and liabilities outside the scope of FAS 144 that are included in an asset group or disposal group, accounting_basis: U.S. GAAP, effective_from: fiscal years beginning after December 15, 2001)_ `CG-MCE-072#S27`
  > “This Statement does not change generally accepted accounting principles applicable to those other individual assets (such as accounts receivable and inventory) and liabilities (such as accounts payable, long-term debt, and asset retirement obligations) not covered by this Statement that are included in such groups.” — [Financial Accounting Standards Board — Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets](https://storage.fasb.org/fas144.pdf), 2001-08; Standards of Financial Accounting and Reporting, Scope, paragraph 4, page 7. Verified 2026-09-09.

- <a id="s-CG-MCE-072-S28"></a>Liabilities that an entity expects to transfer to a potential buyer in a disposal transaction do not qualify for derecognition before they are assumed by a purchaser or otherwise settled; the Board cited Concepts Statement 6 paragraph 42 that once incurred a liability continues as a liability of the entity until it is settled or another event or circumstance discharges it or removes the entity's responsibility to settle it. _(jurisdiction: United States (FASB standard; U.S. generally accepted accounting principles), entity_scope: Liabilities an entity expects to transfer to a buyer in a disposal transaction, accounting_basis: U.S. GAAP)_ `CG-MCE-072#S28`
  > “In addition, liabilities that an entity expects to transfer to a potential buyer in a disposal transaction do not qualify for derecognition prior to being assumed by a purchaser (or otherwise settled). Paragraph 42 of Concepts Statement 6 states, “Once incurred, a liability continues as a liability of the entity until the entity settles it, or another event or circumstance discharges it or removes the entity’s responsibility to settle it.”” — [Financial Accounting Standards Board — Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets](https://storage.fasb.org/fas144.pdf), 2001-08; Appendix B, Basis for Conclusions, Reporting Long-Lived Assets (Disposal Groups) Classified as Held for Sale, paragraph B118, page 74. Verified 2026-09-09.

- <a id="s-CG-MCE-072-S29"></a>Where a counterparty promises to assume or relieve a liability of the transferring entity in exchange for nonfinancial assets within the scope of Subtopic 610-20, the transferring entity must include the carrying amount of that liability in the consideration used to calculate the gain or loss; although so included, the entity must not derecognise the liability itself until it has been extinguished in accordance with paragraph 405-20-40-1. _(jurisdiction: United States (U.S. GAAP as codified by the FASB, applicable to nongovernmental entities), entity_scope: all entities applying U.S. GAAP, accounting_basis: U.S. GAAP (FASB Accounting Standards Codification), conditions: counterparty promises to assume or relieve a liability of the transferring entity)_ `CG-MCE-072#S29`
  > “If a counterparty promises to assume or relieve a liability of an entity in exchange for a transfer of nonfinancial assets or in substance nonfinancial assets within the scope of this Subtopic, the transferring entity shall include the carrying amount of the liability in the consideration used to calculate the gain or loss. Although a liability assumed or relieved by a counterparty shall be included in the consideration used to calculate a gain or loss, an entity shall not derecognize the liability until it has been extinguished in accordance with the guidance in paragraph 405-20-40-1 (see paragraph 610-20-45-3 on how to present the liability if it is extinguished before or after the entity transfers control of the nonfinancial assets or in substance nonfinancial assets).” — [Financial Accounting Standards Board — Accounting Standards Update No. 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets](https://storage.fasb.org/ASU_2017-05.pdf), 2017-02; Amendments to Subtopic 610-20, item 7 — added paragraph 610-20-32-5, 'Measurement'; printed page 19. Verified 2026-09-09.

## Take it off the asset register and re-tie the register to the ledger
<a id="need-CG-MCE-072-P8"></a>

- <a id="s-CG-MCE-072-S31"></a>At the end of a fixed asset’s useful life it is sold off or scrapped, and the related accounting entry is to remove the asset and all related accumulated depreciation from the entity’s accounting records. _(jurisdiction: United States (US GAAP-oriented general guidance from a US publisher; AccountingTools/Steven Bragg), entity_scope: Entities disposing of fixed assets at the end of useful life)_ `CG-MCE-072#S31`
  > “At the end of a fixed asset's useful life, it is sold off or scrapped. This situation arises when the asset is of no further value to the organization. The related accounting entry in this situation is to remove the asset and all related accumulated depreciation from the entity’s accounting records.” — [AccountingTools, Inc. (Steven Bragg) — Fixed Asset Accounting Explained](https://www.accountingtools.com/articles/fixed-asset-accounting.html), 2026-03-13; Section “Step 4: Accounting for the Disposal of a Fixed Asset”, first paragraph. Verified 2026-09-09.

- <a id="s-CG-MCE-072-S32"></a>The point of each of the four disposal entries shown is to flush the asset out of the accounting system so that no asset or accumulated depreciation balance remains on the books. _(jurisdiction: United States (US GAAP-oriented general guidance from a US publisher; AccountingTools/Steven Bragg), entity_scope: Businesses disposing of fixed assets)_ `CG-MCE-072#S32`
  > “In all four of the preceding entries, the main point was to flush the asset out of the accounting system, so that no asset or accumulated depreciation balance is left on the books.” — [AccountingTools, Inc. (Steven Bragg) — Fixed Asset Accounting Explained](https://www.accountingtools.com/articles/fixed-asset-accounting.html), 2026-03-13; Section “Step 4: Accounting for the Disposal of a Fixed Asset”, closing paragraph. Verified 2026-09-09.

- <a id="s-CG-MCE-072-S33"></a>As a recommended practice, the fixed asset subledger should be reconciled to the general ledger by regular reconciliations confirming that asset balances in the detailed register agree with the general ledger totals; the article states the cadence only as “regular”. _(jurisdiction: United States (US GAAP-oriented general guidance from a US publisher; AccountingTools/Steven Bragg), entity_scope: Organizations maintaining a fixed asset subledger, conditions: presented as one of a number of enhancements that “can be made” to fixed asset recordkeeping (“Consider the following options”); cadence stated only as “regular”; no interval specified)_ `CG-MCE-072#S33`
  > “Reconcile the fixed asset subledger to the general ledger . Perform regular reconciliations to confirm that asset balances in the detailed register agree with the general ledger totals.” — [AccountingTools, Inc. (Steven Bragg) — Fixed Asset Accounting Explained](https://www.accountingtools.com/articles/fixed-asset-accounting.html), 2026-03-13; Section “Fixed Asset Accounting Best Practices”, practice “Reconcile the fixed asset subledger to the general ledger”. Verified 2026-09-09.

- <a id="s-CG-MCE-072-S34"></a>The article says proper recordation of a fixed asset disposal is of some importance for presenting a clean balance sheet to users, because the balance sheet should only aggregate information for fixed assets still held by the business. _(jurisdiction: United States, entity_scope: Business entities that maintain accounting records for fixed assets (article's illustration is a corporation))_ `CG-MCE-072#S34`
  > “The proper recordation of a fixed asset disposal is of some importance from the perspective of presenting a clean balance sheet to users, since the balance sheet should only aggregate information for those fixed assets that are still held by the business.” — [AccountingTools, Inc. (author Steven Bragg) — Fixed asset disposal accounting](https://www.accountingtools.com/articles/fixed-asset-disposal-accounting), 2026-05-22; Section 'Example of a Fixed Asset Disposal', closing paragraph, immediately before the 'Related Articles' list. Verified 2026-09-09.

_Partly established. Established: the removal of the asset from the fixed-asset register (S09). Missing: the confirmation that the register still agrees with the ledger control accounts after the disposal._

_Required authority: authoritative professional or accounting standard. Highest achieved: high quality professional secondary reference._

## The paperwork to get and keep — and who approves the disposal first
<a id="need-CG-MCE-072-P9"></a>

- <a id="s-CG-MCE-072-S35"></a>As a recommended practice, supporting documentation — invoices, contracts, disposal records and appraisal reports — should be retained to support asset valuations and facilitate audits; the article names no retention period. _(jurisdiction: United States (US GAAP-oriented general guidance from a US publisher; AccountingTools/Steven Bragg), entity_scope: Organizations maintaining fixed asset records, conditions: presented as one of a number of enhancements that “can be made” to fixed asset recordkeeping (“Consider the following options”); no retention period stated)_ `CG-MCE-072#S35`
  > “Retain supporting documentation . Maintain invoices, contracts, disposal records, and appraisal reports to support asset valuations and facilitate audits.” — [AccountingTools, Inc. (Steven Bragg) — Fixed Asset Accounting Explained](https://www.accountingtools.com/articles/fixed-asset-accounting.html), 2026-03-13; Section “Fixed Asset Accounting Best Practices”, practice “Retain supporting documentation”. Verified 2026-09-09.

- <a id="s-CG-MCE-072-S36"></a>Except as provided in paragraph (b), any person subject to tax under subtitle A of the Code (including a qualified State individual income tax treated under section 6361(a) as imposed by chapter 1 of subtitle A), or any person required to file a return of information with respect to income, must keep permanent books of account or records, including inventories, sufficient to establish the amount of gross income, deductions, credits, or other matters required to be shown by that person in any such return of tax or information. _(jurisdiction: United States (federal internal revenue law, Subtitle A income tax), entity_scope: Any person subject to tax under subtitle A of the Code, or required to file a return of information with respect to income, conditions: Except as provided in paragraph (b) of this section (farmers and wage-earners); Records need only be sufficient to establish amounts or other matters required to be shown in a return of such tax or information)_ `CG-MCE-072#S36`
  > “(a) In general. Except as provided in
paragraph (b) of this section, any person subject to tax under subtitle A of
the Code (including a qualified State
individual income tax which is treated
pursuant to section 6361(a) as if it were
imposed by chapter 1 of subtitle A), or
any person required to file a return of
information with respect to income,
shall keep such permanent books of account or records, including inventories,
as are sufficient to establish the
amount of gross income, deductions,
credits, or other matters required to be
shown by such person in any return of
such tax or information.” — [Office of the Federal Register / U.S. Government Publishing Office (Internal Revenue Service, Treasury) — 26 CFR 1.6001-1 - Records](https://www.govinfo.gov/content/pkg/CFR-2025-title26-vol15/pdf/CFR-2025-title26-vol15-sec1-6001-1.pdf), 2025-04-01; § 1.6001–1 Records, paragraph (a) In general (printed page 77). Verified 2026-09-09.

- <a id="s-CG-MCE-072-S37"></a>The books or records required by § 1.6001–1 must be kept at all times available for inspection by authorized internal revenue officers or employees, and must be retained so long as their contents may become material in the administration of any internal revenue law; the section states no fixed number of years. _(jurisdiction: United States (federal internal revenue law, Subtitle A income tax), entity_scope: Persons required to keep books or records by § 1.6001–1, conditions: Retention period is measured by whether the contents may become material in the administration of any internal revenue law, not by a stated period)_ `CG-MCE-072#S37`
  > “(e) Retention of records. The books or
records required by this section shall
be kept at all times available for inspection by authorized internal revenue officers or employees, and shall be
retained so long as the contents thereof may become material in the administration of any internal revenue law.” — [Office of the Federal Register / U.S. Government Publishing Office (Internal Revenue Service, Treasury) — 26 CFR 1.6001-1 - Records](https://www.govinfo.gov/content/pkg/CFR-2025-title26-vol15/pdf/CFR-2025-title26-vol15-sec1-6001-1.pdf), 2025-04-01; § 1.6001–1 Records, paragraph (e) Retention of records (printed page 77). Verified 2026-09-09.

- <a id="s-CG-MCE-072-S38"></a>To figure any gain that must be reported as ordinary income, permanent records must be kept of the facts needed to figure the depreciation or amortization allowed or allowable on the property, including the date and manner of acquisition, cost or other basis, depreciation or amortization, and all other adjustments that affect basis. _(jurisdiction: United States (federal income tax administered by the IRS), entity_scope: taxpayers disposing of property used in a trade or business or held for investment; the publication states its discussions refer mainly to individuals, though many of the rules also apply to taxpayers other than individuals, accounting_basis: U.S. federal income tax, effective_from: 2025 tax year, effective_to: 2025 tax year)_ `CG-MCE-072#S38`
  > “To figure any gain that must be reported as ordinary income, you must keep permanent records of the facts necessary to figure the depreciation or amortization allowed or allowable on your property. This includes the date and manner of acquisition, cost or other basis, depreciation or amortization, and all other adjustments that affect basis.” — [Internal Revenue Service, U.S. Department of the Treasury — Publication 544 (2025), Sales and Other Dispositions of Assets](https://www.irs.gov/publications/p544), 2026-04-30; Chapter 3. Ordinary or Capital Gain or Loss for Business Property > Depreciation Recapture > Records.. Verified 2026-09-09.

- <a id="s-CG-MCE-072-S39"></a>While federally funded equipment is being used for its originally-authorized purpose, the recipient or subrecipient must not dispose of or encumber its title or other interests in that equipment without the approval of the Federal agency or pass-through entity — external approval is required before the asset leaves the entity. _(jurisdiction: United States (Federal awards subject to 2 CFR part 200, OMB Guidance), entity_scope: Recipients and subrecipients of a Federal award, conditions: equipment whose title is vested in the recipient or subrecipient; while the equipment is being used for the originally-authorized purpose)_ `CG-MCE-072#S39`
  > “(2) While the equipment is being used
for the originally-authorized purpose,
the recipient or subrecipient must not
dispose of or encumber its title or
other interests without the approval of
the Federal agency or pass-through entity.” — [Office of Management and Budget; published in the Code of Federal Regulations by the Office of the Federal Register and the U.S. Government Publishing Office — 2 CFR 200.313 - Equipment](https://www.govinfo.gov/content/pkg/CFR-2025-title2-vol1/pdf/CFR-2025-title2-vol1-sec200-313.pdf), 2025-01-01; § 200.313(a)(2) Title (Equipment), p. 124. Verified 2026-09-09.

_Not established from an authoritative source._

_Required authority: authoritative professional or accounting standard, primary regulator or government. Highest achieved: high quality professional secondary reference, primary regulator or government._

## What to hand to your tax preparer rather than work out yourself
<a id="need-CG-MCE-072-P10"></a>

- <a id="s-CG-MCE-072-S40"></a>Gain or loss is usually realized when property is sold or exchanged: a gain is the excess of the amount realized over the property's adjusted basis, and a loss arises where the adjusted basis exceeds the amount realized. _(jurisdiction: United States (federal income tax administered by the IRS), entity_scope: taxpayers disposing of property; the publication states its discussions refer mainly to individuals, though many of the rules also apply to taxpayers other than individuals, accounting_basis: U.S. federal income tax, effective_from: 2025 tax year, effective_to: 2025 tax year)_ `CG-MCE-072#S40`
  > “You usually realize gain or loss when property is sold or exchanged. A gain is the amount you realize from a sale or exchange of property that is more than its adjusted basis. A loss occurs when the adjusted basis of the property is more than the amount you realize on the sale or exchange.” — [Internal Revenue Service, U.S. Department of the Treasury — Publication 544 (2025), Sales and Other Dispositions of Assets](https://www.irs.gov/publications/p544), 2026-04-30; Chapter 1. Gain or Loss > Gain or Loss From Sales and Exchanges. Verified 2026-09-09.
  _Flagged for professional review — a bookkeeper or accountant should confirm this applies to your situation._

- <a id="s-CG-MCE-072-S41"></a>Where depreciable or amortizable property is disposed of at a gain, all or part of the gain may have to be treated as ordinary income, even if the gain is otherwise nontaxable. _(jurisdiction: United States (federal income tax administered by the IRS), entity_scope: taxpayers disposing of property used in a trade or business or held for investment; the publication states its discussions refer mainly to individuals, though many of the rules also apply to taxpayers other than individuals, accounting_basis: U.S. federal income tax, effective_from: 2025 tax year, effective_to: 2025 tax year)_ `CG-MCE-072#S41`
  > “If you dispose of depreciable or amortizable property at a gain, you may have to treat all or part of the gain (even if otherwise nontaxable) as ordinary income.” — [Internal Revenue Service, U.S. Department of the Treasury — Publication 544 (2025), Sales and Other Dispositions of Assets](https://www.irs.gov/publications/p544), 2026-04-30; Chapter 3. Ordinary or Capital Gain or Loss for Business Property > Depreciation Recapture. Verified 2026-09-09.
  _Flagged for professional review — a bookkeeper or accountant should confirm this applies to your situation._

- <a id="s-CG-MCE-072-S42"></a>The basis of property must be reduced by the depreciation allowed or allowable, whichever is greater; depreciation allowed is the depreciation actually deducted from which a tax benefit was received, and depreciation allowable is the depreciation the taxpayer is entitled to deduct. _(jurisdiction: United States (federal income tax; publication of the IRS, U.S. Department of the Treasury), entity_scope: Taxpayers depreciating business or income-producing property for U.S. federal income tax purposes, accounting_basis: U.S. federal income tax (Internal Revenue Code), not financial reporting, effective_from: 2025 tax year - edition is 'for use in preparing 2025 Returns')_ `CG-MCE-072#S42`
  > “You must reduce the basis of property by the depreciation allowed or allowable, whichever is greater. Depreciation allowed is depreciation you actually deducted (from which you received a tax benefit). Depreciation allowable is depreciation you are entitled to deduct.” — [Internal Revenue Service, U.S. Department of the Treasury — Publication 946 (2025), How To Depreciate Property](https://www.irs.gov/publications/p946), 2025 edition - 'For use in preparing 2025 Returns'; Chapter 1, Overview of Depreciation > 'What Is the Basis of Your Depreciable Property?' > 'Adjusted Basis' > 'Basis adjustment for depreciation allowed or allowable.'. Verified 2026-09-09.
  _Flagged for professional review — a bookkeeper or accountant should confirm this applies to your situation._

- <a id="s-CG-MCE-072-S43"></a>On a disposition of property depreciated under MACRS, any gain on the disposition is generally recaptured - that is, included in income - as ordinary income up to the amount of the depreciation previously allowed or allowable for the property; the publication states that depreciation for this purpose includes the items it then lists. _(jurisdiction: United States (federal income tax; publication of the IRS, U.S. Department of the Treasury), entity_scope: Taxpayers depreciating business or income-producing property for U.S. federal income tax purposes, accounting_basis: U.S. federal income tax (Internal Revenue Code), not financial reporting, effective_from: 2025 tax year - edition is 'for use in preparing 2025 Returns', conditions: property depreciated using MACRS; applies to gain on the disposition, up to previously allowed or allowable depreciation; stated as a general rule ('generally'))_ `CG-MCE-072#S43`
  > “When you dispose of property that you depreciated using MACRS, any gain on the disposition is generally recaptured (included in income) as ordinary income up to the amount of the depreciation previously allowed or allowable for the property. Depreciation, for this purpose, includes the following.” — [Internal Revenue Service, U.S. Department of the Treasury — Publication 946 (2025), How To Depreciate Property](https://www.irs.gov/publications/p946), 2025 edition - 'For use in preparing 2025 Returns'; Chapter 4, Figuring Depreciation Under MACRS > 'When Do You Recapture MACRS Depreciation?' (first paragraph). Verified 2026-09-09.
  _Flagged for professional review — a bookkeeper or accountant should confirm this applies to your situation._

- <a id="s-CG-MCE-072-S44"></a>Where the damaged or stolen property was depreciable property held more than one year, the taxpayer may have to treat all or part of the gain as ordinary income to the extent of depreciation allowed or allowable, with that ordinary income part figured in Part III of Form 4797. _(jurisdiction: United States (federal income tax law administered by the IRS), entity_scope: taxpayers with damaged or stolen depreciable property held more than 1 year, accounting_basis: federal income tax, effective_from: 2025 tax year (edition for use in preparing 2025 returns), conditions: property was depreciable property; held more than 1 year)_ `CG-MCE-072#S44`
  > “If the damaged or stolen property was depreciable property held more than 1 year, you may have to treat all or part of the gain as ordinary income to the extent of depreciation allowed or allowable. You figure the ordinary income part of the gain in Part III of Form 4797.” — [Internal Revenue Service, U.S. Department of the Treasury — Publication 547, Casualties, Disasters, and Thefts](https://www.irs.gov/publications/p547), 2026-04-30; How To Report Gains and Losses — Business and income-producing property — “Depreciable property.”. Verified 2026-09-09.
  _Flagged for professional review — a bookkeeper or accountant should confirm this applies to your situation._

_Partly established. Established: previously claimed depreciation may be brought back into income (S41, S43, S44, S53). Missing: the gain or loss on the return is measured on a different basis._

## Given away, taken by the owner, or lost and written off
<a id="need-CG-MCE-072-P11"></a>

- See above: A long-lived asset to be disposed of other than by sale - the examples given being abandonment, an exchange for a similar productive long-lived asset, or a distribution to owners in a spinoff - must continue to be classified as held and used until it is disposed of, and paragraphs 7-26 apply while it is so classified. ([CG-MCE-072#S13](#s-CG-MCE-072-S13))

- <a id="s-CG-MCE-072-S45"></a>If an entity commits to a plan to abandon a long-lived asset before the end of its previously estimated useful life, depreciation estimates must be revised in accordance with Opinion 20 to reflect use of the asset over its shortened useful life; a long-lived asset that has been temporarily idled must not be accounted for as if abandoned. _(jurisdiction: United States (FASB standard; U.S. generally accepted accounting principles), entity_scope: Long-lived assets to be abandoned; long-lived assets temporarily idled, accounting_basis: U.S. GAAP, effective_from: fiscal years beginning after December 15, 2001)_ `CG-MCE-072#S45`
  > “If an entity commits to a plan to abandon a long-lived asset before the end of its previously estimated useful life, depreciation estimates shall be revised in accordance with Opinion 20 to reflect the use of the asset over its shortened useful life (refer to paragraph 9).16 A long-lived asset that has been temporarily idled shall not be accounted for as if abandoned.” — [Financial Accounting Standards Board — Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets](https://storage.fasb.org/fas144.pdf), 2001-08; Long-Lived Assets to Be Disposed Of Other Than by Sale, Long-Lived Asset to Be Abandoned, paragraph 28, page 13. Verified 2026-09-09.

- <a id="s-CG-MCE-072-S46"></a>The article gives, as examples of disposal, that an asset may be sold to a third party, given to an employee, or thrown in the trash; the list is offered as examples and is not stated to be exhaustive. _(jurisdiction: United States, entity_scope: Business entities that maintain accounting records for fixed assets (article's illustration is a corporation))_ `CG-MCE-072#S46`
  > “For example, it may be sold to a third party, given to an employee, or thrown in the trash.” — [AccountingTools, Inc. (author Steven Bragg) — Fixed asset disposal accounting](https://www.accountingtools.com/articles/fixed-asset-disposal-accounting), 2026-05-22; Untitled opening paragraph under the article title 'Fixed asset disposal accounting' (dated May 22, 2026), before the heading 'How to Account for a Fixed Asset Disposal'. Verified 2026-09-09.

- <a id="s-CG-MCE-072-S47"></a>A loss from abandonment of business or investment property is deductible as a loss, and where such an abandonment is not treated as a sale or exchange the loss is generally an ordinary loss. _(jurisdiction: United States (federal income tax administered by the IRS), entity_scope: taxpayers disposing of property used in a trade or business or held for investment; the publication states its discussions refer mainly to individuals, though many of the rules also apply to taxpayers other than individuals, accounting_basis: U.S. federal income tax, effective_from: 2025 tax year, effective_to: 2025 tax year)_ `CG-MCE-072#S47`
  > “Loss from abandonment of business or investment property is deductible as a loss. A loss from an abandonment of business or investment property that is not treated as a sale or exchange is generally an ordinary loss.” — [Internal Revenue Service, U.S. Department of the Treasury — Publication 544 (2025), Sales and Other Dispositions of Assets](https://www.irs.gov/publications/p544), 2026-04-30; Chapter 1. Gain or Loss > Abandonments. Verified 2026-09-09.

- <a id="s-CG-MCE-072-S48"></a>A casualty or theft gain arises where an insurance payment or other reimbursement exceeds the taxpayer’s adjusted basis in the destroyed, damaged or stolen property, and the gain is figured by the steps the publication then sets out. _(jurisdiction: United States (federal income tax law administered by the IRS), entity_scope: taxpayers claiming a casualty or theft loss on a U.S. federal income tax return, accounting_basis: federal income tax, effective_from: 2025 tax year (edition for use in preparing 2025 returns))_ `CG-MCE-072#S48`
  > “If you receive an insurance payment or other reimbursement that is more than your adjusted basis in the destroyed, damaged, or stolen property, you have a gain from the casualty or theft. Your gain is figured as follows.” — [Internal Revenue Service, U.S. Department of the Treasury — Publication 547, Casualties, Disasters, and Thefts](https://www.irs.gov/publications/p547), 2026-04-30; Figuring a Gain, opening paragraph. Verified 2026-09-09.
  _Flagged for professional review — a bookkeeper or accountant should confirm this applies to your situation._

_Partly established. Established: assets given away, as a disposal that is not a sale, distinguished from the three routes the Question names (S03, S09, S46). Missing: assets transferred to the owner, as a disposal that is not a sale, distinguished from the three routes the Question names; assets lost and written off, as a disposal that is not a sale, distinguished from the three routes the Question names; what changes for each of those disposals that are not sales._

## The accounting rule behind removing a disposed asset
<a id="need-CG-MCE-072-C1"></a>

- See above: For the disposal cases just illustrated (sale to a third party, gift to an employee, or discard), the article states the asset record must be removed from the accounting system together with all related accumulated depreciation - i.e. both the asset record and its accumulated depreciation come off. ([CG-MCE-072#S09](#s-CG-MCE-072-S09))

- See above: A gain or loss not previously recognized that results from the sale of a long-lived asset (disposal group) must be recognized at the date of sale. ([CG-MCE-072#S12](#s-CG-MCE-072-S12))

- See above: A long-lived asset to be disposed of other than by sale - the examples given being abandonment, an exchange for a similar productive long-lived asset, or a distribution to owners in a spinoff - must continue to be classified as held and used until it is disposed of, and paragraphs 7-26 apply while it is so classified. ([CG-MCE-072#S13](#s-CG-MCE-072-S13))

- See above: A gain or loss recognized for a long-lived asset (disposal group) classified as held for sale that is not a component of an entity must be included in income from continuing operations before income taxes in the income statement of a business enterprise, and in income from continuing operations in the statement of activities of a not-for-profit organization. ([CG-MCE-072#S23](#s-CG-MCE-072-S23))

- See above: FAS 144 does not change the generally accepted accounting principles applicable to other individual assets and liabilities that are not covered by the Statement but are included in an asset group or disposal group; the examples of such liabilities given include accounts payable, long-term debt and asset retirement obligations. ([CG-MCE-072#S27](#s-CG-MCE-072-S27))

- <a id="s-CG-MCE-072-S49"></a>On meeting the criteria to derecognise a distinct nonfinancial asset, the entity must recognise a gain or loss for the difference between the consideration measured and allocated to that distinct asset and the carrying amount of that asset; the consideration included in that calculation includes both the transaction price and the carrying amount of liabilities assumed or relieved by a counterparty. _(jurisdiction: United States (U.S. GAAP as codified by the FASB, applicable to nongovernmental entities), entity_scope: all entities applying U.S. GAAP, accounting_basis: U.S. GAAP (FASB Accounting Standards Codification), conditions: entity meets the criteria to derecognise the distinct asset)_ `CG-MCE-072#S49`
  > “When an entity meets the criteria to derecognize a distinct nonfinancial asset or a distinct in substance nonfinancial asset, it shall recognize a gain or loss for the difference between the amount of consideration measured and allocated to that distinct asset in accordance with paragraphs 61020-32-3 through 32-6 and the carrying amount of the distinct asset. The amount of consideration promised in a contract that is included in the calculation of a gain or loss includes both the transaction price and the carrying amount of liabilities assumed or relieved by a counterparty.” — [Financial Accounting Standards Board — Accounting Standards Update No. 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets](https://storage.fasb.org/ASU_2017-05.pdf), 2017-02; Amendments to Subtopic 610-20, item 7 — added paragraph 610-20-32-2, 'Measurement'; printed page 18. Verified 2026-09-09.

_Partly established. Established: the removal of both cost and accumulated depreciation (S09, S31, S32); the measurement of the gain or loss (S49); where that gain or loss is presented (S23); how that treatment applies where the asset is sold (S09, S10, S31); how that treatment applies where the asset is scrapped or abandoned with nothing received (S09, S14, S31). Missing: how that treatment applies where the asset leaves without a sale by gift, owner transfer or casualty loss; an obligation secured by the asset is derecognised separately rather than netted into the gain or loss._

## The rule on depreciating up to the disposal date
<a id="need-CG-MCE-072-C2"></a>

- See above: Where an asset is sold, the company must account for the asset's depreciation up to the date of sale. ([CG-MCE-072#S05](#s-CG-MCE-072-S05))

- See above: Because depreciation must be accounted for up to the date of sale, companies may be required to record a depreciation entry before the sale so that depreciation is current; the text states this as a possibility, not as an entry that is always needed. ([CG-MCE-072#S06](#s-CG-MCE-072-S06))

- See above: A long-lived asset must not be depreciated (amortized) while it is classified as held for sale, while interest and other expenses attributable to the liabilities of a disposal group classified as held for sale must continue to be accrued. ([CG-MCE-072#S07](#s-CG-MCE-072-S07))

- See above: Where property is sold or otherwise disposed of before the end of its recovery period, the depreciation deduction for the year of the disposition is only part of the full-year depreciation amount; property is disposed of when it is permanently withdrawn from use in the business or income-producing activity because of its sale, exchange, retirement, abandonment, involuntary conversion, or destruction. ([CG-MCE-072#S08](#s-CG-MCE-072-S08))

_Partly established. Established: whether depreciation must be recorded up to the date of disposal (S05). Missing: what convention determines the amount for the final part-period._

## The accounting rule for a trade-in exchange
<a id="need-CG-MCE-072-C6"></a>

- See above: The guidance in APB Opinion 29 is based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. ([CG-MCE-072#S18](#s-CG-MCE-072-S18))

- See above: Where the assets surrendered in an acquisition of assets are nonfinancial assets or in substance nonfinancial assets within the scope of Subtopic 610-20, those surrendered assets must be derecognised in accordance with Subtopic 610-20 and the assets acquired must be treated as noncash consideration under Subtopic 610-20. ([CG-MCE-072#S22](#s-CG-MCE-072-S22))

- <a id="s-CG-MCE-072-S55"></a>Under Opinion 29 as amended, a nonmonetary exchange must be measured based on the recorded amount (after reduction, if appropriate, for an indicated impairment of value) of the nonmonetary asset(s) relinquished, and not on the fair values of the exchanged assets, if any of the stated conditions apply: the fair value of neither the asset(s) received nor the asset(s) relinquished is determinable within reasonable limits; the transaction is an exchange of a product or property held for sale in the ordinary course of business for a product or property to be sold in the same line of business to facilitate sales to customers other than the parties to the exchange; or the transaction lacks commercial substance. _(jurisdiction: United States, entity_scope: enterprises applying Opinion 29 as amended by this Statement, accounting_basis: U.S. generally accepted accounting principles (U.S. GAAP), effective_from: fiscal periods beginning after June 15, 2005, conditions: applies only where one of the three stated conditions is met; otherwise the Opinion's fair value measurement principle is not displaced by this paragraph)_ `CG-MCE-072#S55`
  > “A nonmonetary exchange shall be measured based on the recorded amount (after
reduction, if appropriate, for an indicated impairment of value) of the nonmonetary asset(s) relinquished,5a and not on the fair values of the exchanged
assets, if any of the following conditions apply:
a. Fair Value Not Determinable. The fair value of neither the asset(s) received
nor the asset(s) relinquished is determinable within reasonable limits (paragraph 25).
b. Exchange Transaction to Facilitate Sales to Customers. The transaction is an
exchange of a product or property held for sale in the ordinary course of
business for a product or property to be sold in the same line of business to
facilitate sales to customers other than the parties to the exchange.
c. Exchange Transaction That Lacks Commercial Substance. The transaction
lacks commercial substance (paragraph 21).” — [Financial Accounting Standards Board — Statement of Financial Accounting Standards No. 153, Exchanges of Nonmonetary Assets — an amendment of APB Opinion No. 29](https://storage.fasb.org/fas153.pdf), 2004-12; Standards of Financial Accounting and Reporting — Amendments to Opinion 29, paragraph 2.c (amended text of Opinion 29 paragraph 20). Verified 2026-09-09.

- <a id="s-CG-MCE-072-S56"></a>A nonmonetary exchange has commercial substance if the entity's future cash flows are expected to significantly change as a result of the exchange, and the entity's future cash flows are expected to significantly change if either of two stated criteria is met: the configuration (risk, timing, and amount) of the future cash flows of the asset(s) received differs significantly from the configuration of the future cash flows of the asset(s) transferred, or the entity-specific value of the asset(s) received differs from the entity-specific value of the asset(s) transferred and the difference is significant in relation to the fair values of the assets exchanged. _(jurisdiction: United States, entity_scope: enterprises applying Opinion 29 as amended by this Statement, accounting_basis: U.S. generally accepted accounting principles (U.S. GAAP), effective_from: fiscal periods beginning after June 15, 2005)_ `CG-MCE-072#S56`
  > “21. A nonmonetary exchange has commercial substance if the entity’s future
cash flows5b are expected to significantly change as a result of the exchange. The
entity’s future cash flows are expected to significantly change if either of the
following criteria is met:
a. The configuration (risk, timing, and amount)5c of the future cash flows of the
asset(s) received differs significantly from the configuration of the future cash
flows of the asset(s) transferred.
b. The entity-specific value5d of the asset(s) received differs from the entityspecific value of the asset(s) transferred, and the difference is significant in
relation to the fair values of the assets exchanged.” — [Financial Accounting Standards Board — Statement of Financial Accounting Standards No. 153, Exchanges of Nonmonetary Assets — an amendment of APB Opinion No. 29](https://storage.fasb.org/fas153.pdf), 2004-12; Standards of Financial Accounting and Reporting — Amendments to Opinion 29, paragraph 2.d (new Opinion 29 paragraph 21, under heading “Commercial Substance”). Verified 2026-09-09.

_Partly established. Established: how the gain or loss on the surrendered asset is measured (S49). Missing: the credit the dealer allows for the surrendered asset is consideration received for that asset rather than a reduction in the price of the replacement; the amount at which the replacement asset is recorded when part of its consideration is the surrendered asset._

## How the federal tax rules treat a trade-in
<a id="need-CG-MCE-072-C3"></a>

- See above: A sale is a transfer of property for money or a mortgage, note, or other promise to pay money, while an exchange is a transfer of property for other property or services. ([CG-MCE-072#S16](#s-CG-MCE-072-S16))

- See above: Where property is received in exchange for other property in a taxable exchange, the basis of the property received is usually its FMV at the time of the exchange; a taxable exchange occurs when the taxpayer receives cash or property not similar or related in use to the property exchanged. ([CG-MCE-072#S21](#s-CG-MCE-072-S21))

- <a id="s-CG-MCE-072-S50"></a>The like-kind exchange rules do not apply to exchanges of the listed property, which includes real property used for personal purposes, real property held primarily for sale, and any personal or intangible property that is not defined as an interest in real property in Regulations section 1.1031(a)-3(a)(5). _(jurisdiction: United States (federal income tax administered by the IRS), entity_scope: taxpayers disposing of property; the publication states its discussions refer mainly to individuals, though many of the rules also apply to taxpayers other than individuals, accounting_basis: U.S. federal income tax, effective_from: 2025 tax year, effective_to: 2025 tax year)_ `CG-MCE-072#S50`
  > “The rules for like-kind exchanges do not apply to exchanges of the following property.
 Real property used for personal purposes, such as your home.
 Real property held primarily for sale.
 Any personal or intangible property that is not defined as an interest in real property in Regulations section 1.1031(a)-3(a)(5).” — [Internal Revenue Service, U.S. Department of the Treasury — Publication 544 (2025), Sales and Other Dispositions of Assets](https://www.irs.gov/publications/p544), 2026-04-30; Chapter 1. Gain or Loss > Nontaxable Exchanges > Qualifying Property. Verified 2026-09-09.
  _Flagged for professional review — a bookkeeper or accountant should confirm this applies to your situation._

- <a id="s-CG-MCE-072-S51"></a>The basis of property a taxpayer buys is usually its cost, and that cost is the amount paid in cash, debt obligations, other property or services. _(jurisdiction: United States (federal income tax), entity_scope: Taxpayers who buy property, accounting_basis: U.S. federal income tax (basis of property))_ `CG-MCE-072#S51`
  > “The basis of property you buy is usually its cost. The cost is the amount you pay in cash, debt obligations, other property, or services.” — [Internal Revenue Service, U.S. Department of the Treasury — Publication 551 (12/2025), Basis of Assets](https://www.irs.gov/publications/p551), 2025-12; Publication 551 - Main Contents > Cost Basis. Verified 2026-09-09.
  _Flagged for professional review — a bookkeeper or accountant should confirm this applies to your situation._

_Not established from an authoritative source._

## How the tax gain or loss and depreciation recovery are measured
<a id="need-CG-MCE-072-C5"></a>

- See above: Gain or loss is usually realized when property is sold or exchanged: a gain is the excess of the amount realized over the property's adjusted basis, and a loss arises where the adjusted basis exceeds the amount realized. ([CG-MCE-072#S40](#s-CG-MCE-072-S40))

- See above: On a disposition of property depreciated under MACRS, any gain on the disposition is generally recaptured - that is, included in income - as ordinary income up to the amount of the depreciation previously allowed or allowable for the property; the publication states that depreciation for this purpose includes the items it then lists. ([CG-MCE-072#S43](#s-CG-MCE-072-S43))

- See above: A casualty or theft gain arises where an insurance payment or other reimbursement exceeds the taxpayer’s adjusted basis in the destroyed, damaged or stolen property, and the gain is figured by the steps the publication then sets out. ([CG-MCE-072#S48](#s-CG-MCE-072-S48))

- <a id="s-CG-MCE-072-S52"></a>Adjusted basis is original cost or other basis increased by certain additions and decreased by certain deductions; the stated increases include improvement costs with a useful life of more than 1 year and the stated decreases include depreciation and casualty losses. _(jurisdiction: United States (federal income tax administered by the IRS), entity_scope: taxpayers disposing of property; the publication states its discussions refer mainly to individuals, though many of the rules also apply to taxpayers other than individuals, accounting_basis: U.S. federal income tax, effective_from: 2025 tax year, effective_to: 2025 tax year)_ `CG-MCE-072#S52`
  > “The adjusted basis of property is your original cost or other basis increased by certain additions and decreased by certain deductions. Increases to basis include costs of any improvements having a useful life of more than 1 year. Decreases to basis include depreciation and casualty losses.” — [Internal Revenue Service, U.S. Department of the Treasury — Publication 544 (2025), Sales and Other Dispositions of Assets](https://www.irs.gov/publications/p544), 2026-04-30; Chapter 1. Gain or Loss > Gain or Loss From Sales and Exchanges > Adjusted basis.. Verified 2026-09-09.
  _Flagged for professional review — a bookkeeper or accountant should confirm this applies to your situation._

- <a id="s-CG-MCE-072-S53"></a>A gain on the disposition of section 1245 property is treated as ordinary income to the extent of depreciation allowed or allowable on the property. _(jurisdiction: United States (federal income tax administered by the IRS), entity_scope: taxpayers disposing of property used in a trade or business or held for investment; the publication states its discussions refer mainly to individuals, though many of the rules also apply to taxpayers other than individuals, accounting_basis: U.S. federal income tax, effective_from: 2025 tax year, effective_to: 2025 tax year)_ `CG-MCE-072#S53`
  > “A gain on the disposition of section 1245 property is treated as ordinary income to the extent of depreciation allowed or allowable on the property. See Gain Treated as Ordinary Income , later.” — [Internal Revenue Service, U.S. Department of the Treasury — Publication 544 (2025), Sales and Other Dispositions of Assets](https://www.irs.gov/publications/p544), 2026-04-30; Chapter 3. Ordinary or Capital Gain or Loss for Business Property > Depreciation Recapture > Section 1245 Property. Verified 2026-09-09.
  _Flagged for professional review — a bookkeeper or accountant should confirm this applies to your situation._

_Partly established. Established: depreciation previously claimed may be recovered into income on disposal (S43, S53). Missing: the gain or loss reported on a federal return is measured on a basis that may differ from the book carrying amount._

## The records the tax rules require you to keep
<a id="need-CG-MCE-072-C4"></a>

- See above: As a recommended practice, supporting documentation — invoices, contracts, disposal records and appraisal reports — should be retained to support asset valuations and facilitate audits; the article names no retention period. ([CG-MCE-072#S35](#s-CG-MCE-072-S35))

- See above: Except as provided in paragraph (b), any person subject to tax under subtitle A of the Code (including a qualified State individual income tax treated under section 6361(a) as imposed by chapter 1 of subtitle A), or any person required to file a return of information with respect to income, must keep permanent books of account or records, including inventories, sufficient to establish the amount of gross income, deductions, credits, or other matters required to be shown by that person in any such return of tax or information. ([CG-MCE-072#S36](#s-CG-MCE-072-S36))

- See above: The books or records required by § 1.6001–1 must be kept at all times available for inspection by authorized internal revenue officers or employees, and must be retained so long as their contents may become material in the administration of any internal revenue law; the section states no fixed number of years. ([CG-MCE-072#S37](#s-CG-MCE-072-S37))

- See above: To figure any gain that must be reported as ordinary income, permanent records must be kept of the facts needed to figure the depreciation or amortization allowed or allowable on the property, including the date and manner of acquisition, cost or other basis, depreciation or amortization, and all other adjustments that affect basis. ([CG-MCE-072#S38](#s-CG-MCE-072-S38))

_Not established from an authoritative source._

## Register, ledger and authorisation controls around a disposal
<a id="need-CG-MCE-072-C7"></a>

- See above: At the end of a fixed asset’s useful life it is sold off or scrapped, and the related accounting entry is to remove the asset and all related accumulated depreciation from the entity’s accounting records. ([CG-MCE-072#S31](#s-CG-MCE-072-S31))

- See above: The point of each of the four disposal entries shown is to flush the asset out of the accounting system so that no asset or accumulated depreciation balance remains on the books. ([CG-MCE-072#S32](#s-CG-MCE-072-S32))

- See above: As a recommended practice, the fixed asset subledger should be reconciled to the general ledger by regular reconciliations confirming that asset balances in the detailed register agree with the general ledger totals; the article states the cadence only as “regular”. ([CG-MCE-072#S33](#s-CG-MCE-072-S33))

- See above: While federally funded equipment is being used for its originally-authorized purpose, the recipient or subrecipient must not dispose of or encumber its title or other interests in that equipment without the approval of the Federal agency or pass-through entity — external approval is required before the asset leaves the entity. ([CG-MCE-072#S39](#s-CG-MCE-072-S39))

_Not established from an authoritative source._

_Required authority: authoritative professional or accounting standard. Highest achieved: high quality professional secondary reference, primary regulator or government._

## Not yet fully established from an authoritative source

- Establish the derecognition treatment for a disposed long-lived asset under the applicable accounting framework, including the removal of both cost and accumulated depreciation, the measurement of the gain or loss, and where that gain or loss is presented. Establish also how that treatment applies where the asset is sold, where it is scrapped or abandoned with nothing received, and where it leaves without a sale by gift, owner transfer or casualty loss, and that an obligation secured by the asset is derecognised separately rather than netted into the gain or loss. _(partly established)_
- Establish whether depreciation must be recorded up to the date of disposal and what convention determines the amount for the final part-period. _(partly established)_
- Establish how a trade-in is treated for federal tax purposes, whether that differs from the book treatment, and how the recorded cost of the replacement asset is determined in each. The federal tax side of each limb, including the tax basis of the replacement property acquired in the trade-in, is established here; the amount at which the replacement asset is recorded in the books is set by the applicable accounting framework, is owned by the sibling slot declared at that class, and is never to be established by generalising a federal tax authority into a book-accounting proposition. _(not established)_
- Establish what records substantiate a disposal, its date and the consideration received, for each of sale, scrap and trade-in, and how long they must be kept relative to the asset's record. _(not established)_
- Establish that the gain or loss reported on a federal return is measured on a basis that may differ from the book carrying amount, and that depreciation previously claimed may be recovered into income on disposal. _(partly established)_
- Establish, under the applicable accounting framework, how a disposal settled by a trade-in is recorded in the books: that the credit the dealer allows for the surrendered asset is consideration received for that asset rather than a reduction in the price of the replacement, how the gain or loss on the surrendered asset is measured, and the amount at which the replacement asset is recorded when part of its consideration is the surrendered asset. _(partly established)_
- Establish the documented bookkeeping and internal-control expectations surrounding the disposal of a fixed asset: that the disposal is authorised before the asset leaves the business, that the asset is removed from the fixed-asset subsidiary register when it is removed from the ledger, and that the register is re-agreed to the ledger asset and accumulated-depreciation control accounts once the disposal is recorded. _(not established; below the required authority class)_
- Establish how to determine the asset's carrying amount at the disposal date from the register - original cost, accumulated depreciation to date, and the difference between them - before any entry is made. _(partly established; below the required authority class)_
- Establish that depreciation must be brought up to the disposal date before the asset is removed, and what convention governs the amount for the final part-period. _(partly established)_
- Show the removal entry in full: derecognising cost, derecognising accumulated depreciation, recording the consideration received, and recognising the difference as a gain or a loss. _(partly established)_
- Distinguish the three routes the Question names and show how the entry changes for each: a sale with proceeds, a scrap or abandonment with no proceeds, and a trade-in where the consideration is a credit rather than money. _(partly established)_
- Establish how a trade-in credit is treated: what it represents on the dealer invoice, what amount the replacement asset is recorded at in the books, and that the treatment for the return may differ. _(not established)_
- Explain where the gain or loss belongs on the profit and loss and why the amount received for equipment is not recorded as revenue. _(partly established)_
- Establish the removal of the asset from the fixed-asset register and the confirmation that the register still agrees with the ledger control accounts after the disposal. _(partly established; below the required authority class)_
- Identify the documents that must be obtained and retained for each route, and the authorisation expected before an asset leaves the business. _(not established; below the required authority class)_
- Flag the tax consequences that follow a disposal without computing them, establishing that the gain or loss on the return is measured on a different basis and that previously claimed depreciation may be brought back into income. _(partly established)_
- Distinguish disposals that are not sales - assets given away, transferred to the owner, or lost and written off - from the three routes the Question names, and identify what changes for each. _(partly established)_

## Related

- [How does depreciation actually get into my books, and why doesn't it match the depreciation on my tax return?](https://uppago.com/resources/how-does-depreciation-actually-get-into-my-books-and-why-doesn-t-it-match-the)
- [How do I record money I take out of the business for myself, and money I put in?](https://uppago.com/resources/how-do-i-record-money-i-take-out-of-the-business-for-myself-and-money-i-put-in)

_Reference date 2026-09-07. Statements are quoted verbatim from their sources; scope and verification dates are shown on each._