CFP

By Investopedia AAA

Characteristics and Income Taxation of Business Entities - Disposition

Disposition

Business itself:
If a business is disposed of prior to the end of the amortization period, the company/owner can deduct any remaining deferred start-up costs. However, they can deduct these deferred start-up costs only to the extent they qualify as a loss from a business.

Business Assets:
Depreciable assets can be: exchanged, retired, or sold.

After the disposition of an asset (depreciable), an accounting entry is made to recognize any unrecorded depreciation expenses up to the date of the disposition. The asset's cost and accumulated depreciation are then removed from the respective general ledger accounts. The losses or gains (realized) associated with the disposition are recorded in a separate account and appear on the income statement named as either income (gains) or expense (losses).

Sample Questions 1 - 6

You May Also Like

Related Articles
  1. Several things factor into the salary of a financial advisor. Here's a look.
    Investing Basics

    How Much Does A Financial Advisor Earn?

  2. With a long list of risks, losses associated with foreign exchange trading may be greater than initially expected. Here are the top 5 forex risks to avoid.
    Economics

    Top 5 Forex Risks Traders Should Consider

  3. ISAs are financial instruments that allow students to raise funds to pay for their degrees by selling shares in their future earnings.
    Investing Basics

    Funding Higher Education With An ISA

  4. Top Ways to protect your purchases from credit card hackers or security breaches.
    Credit & Loans

    7 Ways To Protect Against Credit Card ...

  5. The Internal Revenue Service's new 2015 contribution limits for tax-deferred savings plans are higher; here's what you and your clients should know.
    Investing Basics

    New 2015 Contribution Limits: Advisors ...

Trading Center