Disposal of Depreciable Assets Not Involving Exchanges

Long-term depreciable assets may be disposed of by being discarded, sold, or exchanged. When long-term assets are disposed of, it is necessary to record the depreciation up to the date of disposal and to remove the carrying value from the accounts by removing the cost from the asset account and the depreciation to date from the accumulated depreciation account. If a long-term asset is sold at a price that differs from its carrying value, there is a gain or loss that should be recorded and reported on the income statement.