Question

What factors determine the gain or loss on the sale of a PPE asset?

Answer 1

Fixed assets, also known as tangible assets or property, plant and equipment, is a term used in accounting for assets and property that cannot easily be converted into cash. This can be compared with current assets such as cash or bank accounts, described as liquid assets.

The gain or loss on the sale of a PPE asset is calculated as the difference between the sales proceeds and theasset's net book value. Sales proceeds in excess of net book values create gains;sales proceeds less than net book values cause losses.

PPE is a classification on a balance sheet of a company's fixed assets, such as buildings, computers, furniture, land, and machinery, that are expected to be used for more than a year. PPE is shown on the balance sheet grouped together at original cost, minus net accumulated depreciation.

To calculate PP&E, add the amount of gross property, plant, and equipment, listed on the balance sheet, to capital expenditures. Next, subtract accumulated depreciation from the result.