Gains and Losses
The application calculates the realized gain or loss amount for all disposed assets. You can decide whether to recognize the gain or loss. This section first describes the gain or loss calculation, then details the system defaults for recognizing gains and losses.
Gain or Loss Calculation
Calculating the gain or loss on a disposed asset requires determining the net proceeds from the disposal and the asset's adjusted basis. The system then subtracts the adjusted basis from the net proceeds to arrive at the net gain or loss.
The system calculates net proceeds using the information on the Asset Disposal window as:
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|
cash proceeds |
|
plus |
noncash proceeds |
|
minus |
expenses of the sale. |
Determining the asset's adjusted basis is more complex. Most of the components of the adjusted basis are described in the Depreciable Basis topic.
The adjusted basis for the gain or loss calculation equals:
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|
the asset's depreciable basis |
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plus |
|
|
plus |
|
|
plus |
the salvage value if it was subtracted in determining the depreciable basis |
|
minus |
total accumulated depreciation through the disposal date. |
Gain or Loss Recognition Defaults
The system determines the gain or loss recognition defaults according to the disposal method selected and the depreciation book. You can override the default when you dispose of the asset.
| Disposal Method (Code) | Tax, State, AMT, and ACE Books | User Books |
| Like-kind exchange (K) | ||
|
R,S,C,E,F |
Do not recognize | Do not recognize |
|
P,A,T,Q,Z before 2018 |
Do not recognize | Do not recognize |
|
P,A,T,Q,Z after 2017 |
Recognize | Do not recognize |
| Involuntary conversion (V) | Do not recognize | Recognize |
| All others | Recognize | Recognize |