Accounting (AS)·Depreciation & disposal · NSSCAS 2.1.2
Disposal of non-current assets
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When a business sells an old van or machine, the books must be cleaned up: the cost comes out, the depreciation comes out, and a disposal account reveals whether the sale made a profit or a loss. This is one of the most reliable marks-earners in Paper 1 — a full disposal set of T-accounts, then the profit or loss placed correctly in the income statement and the statement of financial position. Master the four steps here and you will never lose those marks again.
What you'll learn in this lesson
By the end you should be able to (NSSCAS Accounting (AS) 2.1.2):
- record the disposal of a non-current asset in the asset account, provision for depreciation account and the disposal account
- prepare an income statement to include depreciation of non-current assets and profit or loss on asset disposal
- prepare a statement of financial position
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