Select personalised ads. Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors. Your Money. Personal Finance. Your Practice. Popular Courses. Key Takeaways Gains and losses are the opposing financial results that will be produced through a company's non-primary operations and production processes.
Revenue describes income earned through the provision of a business's primary goods or services. An expense is a cost incurred in the process of producing or offering a primary business operation. Article Sources. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts.
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Investopedia does not include all offers available in the marketplace. Related Articles. Financial Analysis How do operating income and revenue differ? Financial Statements Income Statements for Merchandising vs. Service Companies. Financial Statements Gross Profit vs. A loss on disposal of a plant asset is reported in the income statement in financial statements. Let me explain the treatment step by step: Take the cost of the asset.
Calculate the accumulated depreciation of the plant asset up-to the date of disposal. For example, if an asset that was acquired on 13 th Jan is disposed at 15 th August The first step is to calculate accumulated depreciation from 13 th Jan to 15 th August Subtract the accumulated depreciation from the cost of the plant to arrive at net book value.
This amount will appear in our Ledger Balance the next day. A journal entry is recorded to increase debit depreciation expense and increase credit accumulated depreciation. Depreciation expense is reported on the income statement as a reduction to income. The increase in the accumulated depreciation account reduces the asset to its current book value.
An Asset for Sale — one way of disposing an asset is by selling it. If the proceeds are less than book value, a loss on disposal has been realized.
If the proceeds are more than book value, the result is a gain. The proceeds from the sale will increase debit cash or other asset account. Depending on whether a loss or gain on disposal was realized, a loss on disposal is debited or a gain on disposal is credited.
The loss or gain is reported on the income statement. The loss reduces income, while the gain increases it. Prior to zeroing out their account balances, these accounts should reflect the updated depreciation expense computed up to the disposal sale date. Involuntary conversion of assets occurs when disposal is due to unforeseen circumstances, such as theft or casualty. The involuntary conversion of an asset occurs when an asset must be disposed of due to unforeseen circumstances, such as theft, casualty, or condemnation.
The forced disposal of the asset may result in cash proceeds from the filing and payment of an insurance claim on the asset or the receipt of a casualty award. Unlike a voluntary sale, involuntary conversion of assets can involve an asset exchange for monetary or non-monetary assets. An involuntary conversion is the forced disposal of an asset. Monetary assets consist of cash or cash-equivalent assets. An involuntary conversion involving an exchange for monetary assets is accounted for the same way as a typical sales transaction, with a gain or loss reported in the income statement in the period the conversion took place.
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