Unformatted text preview: Fixed assets may be disposed of in several ways, for example, the asset may become obsolete, sold, trashed, traded-in, or donated. If cash is received during the disposition of a fixed asset, cash and revenue should be recognized. A similar asset exchange involves exchanging one asset for another with the similar type of function. For example, when an old delivery truck is traded-in for a new delivery truck. A dissimilar asset exchange is the exchange of one asset for another that performs an entirely different function. An example of this would be to trade-in a company car for a forklift. Losses on similar or dissimilar exchanges are reported as they occur. Gains on similar exchanges are generally deferred. Gains on similar exchanges reduce the cost of the new asset. Gains on dissimilar exchanges are reported as they occur....
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- Spring '10
- Generally Accepted Accounting Principles