Accounting for IGCSE & O level - Accounting Procedures (Section 18 - No. 28)
What will be the impact on the statement of financial position when an asset is disposed of?
Decrease in the asset's book value
Increase in accumulated depreciation
Decrease in total assets
Increase in retained earnings if a loss is recognized
Explanation
Disposing of the asset removes its book value and therefore decreases assets. Accumulated depreciation is reduced to remove it. If a loss is recognized, retained earnings decrease.
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