Gain on disposal of Fixed assets as per accounting books

Lesson Summary-Accounting Gain on Disposal of Fixed assets for Cambodia Tax

Accounting gain on Disposal of Fixed asset is non-taxable income for tax on income (profit). Gain on fixed asset disposal is accounting gain (other income) but it is not taxable income for tax on income (profit), but if gain on disposal of fixed asset under tax law is taxable income.

Example 1

Assume that ABC Company disposed office equipment, proceed [1] from office equipment disposal is $40,000 and net book values (NBVs) of office equipment per accounting policy are $30,000.

Required

Calculate gain (loss) on office equipment disposal and comment about Cambodia Tax treatment.

Answer

Gain(loss) on office equipment disposal = proceed – NBV=$40,000-30,000=$10,000

Amount of $10,000 is gain on office equipment disposal based on accounting policy, so it is gain (other income) for accounting purpose, but it is not taxable income for tax on income purpose.

[1] proceed : amount received for office equipment disposal.