Depreciation

Question 1

At what amount should net carrying amount be decreased when an asset from a composite group of asset is sold?

Answer 1

The carrying amount of the asset accounts is decreased by the cash proceeds of the sale exactly.

When applying group or composite depreciation methods, when an asset is sold, the cost of the asset is removed and the accumulated depreciation is assumed to be equal to the difference between cash received and cost. When the asset cost and this accumulated depreciation amount are both removed, the carrying amount of the asset is decreased by the cash proceeds exactly.