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wilbur 09-10-2012
wilbur - Columbia University (NY)
When depreciable asset is disposed off at any time during the financial year, an entry should be made to give effect of the disposal. Since, the residual value of asset is only estimated; it is common for asset to be sold at price that differs from its book value at the date of disposal. When asset is sold, any profit or loss is computed by comparing book value with the amount received from sale. As you know, book value is obtained by deducting accumulated depreciation from original cost of the asset. A sale price in excess of the book value produces profit; a sale price below the book value produces loss. This profit or loss should be shown in the profit & loss account.  Source:http://in.docsity.com/en-docs/Qouted_Companies-Financial_Accounting-Lecture_Handout
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hugger 18-10-2012
hugger - Stanford University (CA)
Whenever an asset is sold, the price differs from that one mentioned in the book of entry.
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