Accounting for IGCSE & O level - Accounting Procedures (Section 12 - No. 49)
What is the impact on the balance sheet when an asset is disposed of?
The asset account is reduced.
Accumulated depreciation is reduced.
Cash is increased if sold for cash.
Retained earnings decrease.
Explanation
Removing the asset removes it from the balance sheet. Accumulated depreciation is removed. Cash goes up (if sold for cash). Retained earnings are impacted through the gain or loss on disposal.
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