Treatment of a disposal of Property, Plant and Equipment

bobber122

Am i right in saying the rule is when there are proceeds or losses on the disposal of PPE the proceeds/loss goes into the statement of comprehensive income and the carrying amount or fair value amount is reduced from the PPE figure shown in the statement of financial position?

Where exactly is the gain/loss shown in the statement of comprehensive income?

Thanks,

Jake

omega man

The loss on disposal is treated as an expense in the statement of comprehensive income and a gain on the income side.

bobber122

Thanks

Steve Collings

Just as an aside, if you're preparing the statement of cash flows, be sure to only include the proceeds from the disposal, not the gain or loss figure. This tends to trip some students up!

All the best
Steve

omega man

Steve - I am sure they try their best to trip us up anyway.

omega man

Steve - The proceeds are the net gain and the carrying amount added together anyway.

Steve Collings

omega man wrote: »

Steve - I am sure they try their best to trip us up anyway.

I'm not sure the AAT set out to do this. The exams are fair and they would only examine within the boundaries of their syllabus, and although some technical requirements are fairly demanding the examiners would not set out to trip students up, more that they are interested to see how students' technical knowledge fares up to such requirements.

I agree that the proceeds on disposal are the gain/(loss) plus/(minus) the NBV of the asset disposed of, though I may have been slightly vague in what I was trying to say. Some students have been known to put the actual gain/loss from the statement of comprehensive income into the statement of cash flows which would then not allow the statement of cash flows to balance.

All the best
Steve