Sometime business need to sale their Fixed assets .Before we go further, we have to understand that what are Fixed Assets .

Fixed Assets : Fixed assets are the long-term tangible assets that are used by business in generating income. Example Land and building ,plant and Machinery furniture and fixture.

When we sale these assets it effects our Balance sheet Asset side as these assets are going out of business and in exchange of that either we increase our bank accounts or Cash accounts or either purchase new assets. Under such condition we sometime make profit or either loss.

The disposal of assets involves eliminating assets from the accounting records.

When a fixed asset or plant asset is sold, there are several things that must take place:

1. The fixed asset’s depreciation expense must be recorded up to the date of the sale
2. The fixed asset’s cost and the updated accumulated depreciation must be removed
3. The cash received must be recorded
4. The difference between the amounts removed in 2. and the cash received in 3. is recorded as a gain or loss on the sale of the fixed assets