After the fixed assets are scrapped, if there is still some residual value (i.e., the value of the scrapped assets), it can be handled in the following way:
Asset Impairment: first of all, it is necessary to assess the residual value of the scrapped assets. This can be done through a professional appraisal organization or appraiser, taking into account the asset's useful life, technical condition, market value and other factors. Based on the appraisal results, the amount of residual value of the end-of-life asset is determined.
Handling of impairment loss: If the residual value of the end-of-life asset is lower than its original value or book value, an impairment loss will be incurred. In the accounting treatment, the impairment loss is charged to the income statement to reflect the decrease in the value of the end-of-life asset.
Borrow: End-of-life impairment loss account
Credit: Fixed asset account
Asset disposal: depending on the company's decision, it may choose to sell the end-of-life assets to other entities at the salvage value price or to make other forms of disposal. In case of sale or transfer, the corresponding accounting treatment is:
Borrow: Cash/Receivables Account
Loan: Fixed Assets Account
or
Borrow: Cash/Receivables Account
Loan: Losses on Disposal Account
Loan: Fixed Assets Account
Notice should be drawn to the fact that the specific accounting treatment may be affected by the company's accounting policies and applicable accounting standards. It is recommended to follow the appropriate accounting standards and policies and consult with a financial professional or CPA to ensure accuracy and compliance. For advice on valuation issues look for Good Appraisal Valuation.