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Non-current assets: disposal and revaluation

Disposal of a non-current asset

1.1 Calculating the profit or loss on disposal

 At the end of the asset’s life it will either be abandoned or sold. This is known
as a ‘disposal’ in accounting terminology.

 A comparison is made of the difference between the carrying amount of the
asset at the date of its disposal and the proceeds or disposal value received.

 The difference is referred to as the profit or loss arising on the disposal of a
non-current asset.

If the proceeds received on disposal are greater than the carrying
amount then the difference is a profit on disposal, which is treated as
income when calculating the profit or loss for the year.

If the proceeds received on disposal are less than the carrying amount
then the difference is a loss on disposal, which is treated as an
expense when calculating the profit or loss for the year.

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