The conditions for the derecognition of a fixed asset.
Disposal of fixed assets, including the **, transfer, scrapping or damage of fixed assets, foreign investment, etc. If a fixed asset meets one of the following conditions, it shall be derecognized:
The fixed asset is in disposal status
The fixed asset is not expected to generate economic benefit from its use or disposal.
Accounting for the disposal of fixed assets.
If the transfer is classified as held for sale, the accounting treatment shall be carried out in accordance with the relevant provisions of the non-current assets held for sale and the disposal groupThe accounting treatment of fixed assets that are not classified as held for sale and disposed of is as follows:
When the book value of a fixed asset is transferred to the fixed asset disposal.
Borrow: Disposal of fixed assets.
Accumulated depreciation. Provision for impairment of fixed assets.
Credit: Fixed Assets.
When expenses such as cleaning expenses are incurred.
Borrow: Disposal of fixed assets.
Credit: bank deposits, etc.
When the residual material is changed (warehousing) and compensation is receivable from the insurance company or the responsible person.
Borrow: Bank deposit (residual material change).
Raw materials (residual material storage).
Other receivables (compensation from the insurance company or the person responsible).
Credit: Disposal of fixed assets.
Tax Payable – VAT payable (output tax).
*When the price of fixed assets is received.
Borrow: Bank deposit.
Credit: Disposal of fixed assets.
Tax Payable – VAT payable (output tax).
When the disposal is completed and the fixed assets are carried forward for disposal.
Gains or losses on the disposal of fixed assets due to **, transfer, normal scrapping and other reasons.
Borrowing or Crediting: Disposal of fixed assets.
Credit or Debit: Gains or losses on disposal of assets.
Gains or losses arising from scrapping and liquidation due to natural disasters, damage, etc.
Borrow: Disposal of fixed assets.
Credit: Non-operating income (profits).
Borrow: Non-operating expenses (losses).
Credit: Disposal of fixed assets.
Net profit or loss on disposal of fixed assets is calculated based on economic transactions.
The first step is to determine the "expenditure" items that should be included in the debit side of the fixed asset disposal account, which generally includes the book value of the transferred fixed assets and the fixed asset disposal expenses paid.
The second step is to determine the "income" items that should be included in the credit of the fixed assets disposal account, which generally includes the disposal price obtained (excluding VAT), the income from the sale of residual materials, and the compensation receivable from the insurance company or the responsible person.
In the third step, the total amount of the "Income" item is subtracted from the total amount of the "Expenditure" item, which is the net profit or loss on the disposal of fixed assets.