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GlossaryFinance

What is disposal?

Also known as: asset disposal, retirement, derecognition, gain or loss on disposal.

Definition

Disposal is removing an asset from use and from the books — by sale, scrapping, donation or trade-in — and recording any gain or loss against NBV.

1 min readFinanceExplore Asetavo depreciation →

Disposal is the last stage of the asset lifecycle. The asset leaves the business, its cost and accumulated depreciation are removed from the register, and the difference between what you received and its NBV is recognized as a gain or loss.

Formula
Gain / (loss) on disposal = Net proceeds − NBV at disposal date
Examples
Sold: NBV $20,000, proceeds $21,000 → gain $1,000.
Scrapped: NBV $3,000, proceeds $0 → loss $3,000.
Traded in: NBV $8,000, trade-in allowance $6,500 → loss $1,500.

Good disposal practice

  • Approve disposals before they happen
  • Wipe data from IT equipment and keep evidence
  • Use appropriate recycling for electronics and hazardous items
  • Record the disposal in the register on the day — unrecorded disposals become ghost assets

In Asetavo

Disposals record the method, date and gain or loss with an audit trail, and are blocked while an asset is checked out.

In practice

Want to understand this in practice?

GuideFixed asset depreciation explainedMethods, schedules, book vs tax and worked examples — in plain English.Read the guide →
Related features
DepreciationAsset register
Related terms
Write-offA write-off removes an asset from the books when it is lost, stolen, destroyed or worthless, recognizing its remaining NBV as a loss.NBVNet book value (NBV) is an asset’s cost minus its accumulated depreciation (and any impairment) — the value it is carried at on the balance sheet.Asset lifecycleThe asset lifecycle is the sequence of stages an asset goes through — plan, acquire, deploy, operate and maintain, then dispose.Accumulated depreciationAccumulated depreciation is the total depreciation charged on an asset since it was put into service, shown as a deduction from its cost.Ghost assetA ghost asset is recorded in the register (and often still on the books) but no longer physically exists or cannot be found.
From definition to done

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