Loss on disposal of Fixed assests as per LOT

Loss on disposal of fixed assets as per Lax on Cambodia Tax

Loss on disposal of fixed assets as per law on Cambodia Tax is deductible expense.

Sometime company may dispose old fixed assets, so then loss on disposal of fixed asset may happen if proceed of fixed asset disposal is less than undepreciated value of fixed asset.

You can learn the following formulae for loss on disposal of fixed assets.

Loss on disposal of fixed assets= proceed from fixed asset disposal – undepreciated value of fixed asset per law on Cambodia Tax [1]

Example 1

Assume that XYZ  has many machines, and beginning tax undepreciated values of machines for 2018 is $50,000. On 28 July 2018, XYZ company disposed all machines and proceeds from disposal are $40,000.

Required

Calculate gain (loss) on machines disposal per law on Cambodia Tax.

Answer

Gain (loss) on disposal of machines= proceed from machines disposal – undepreciated value of machines per law on Cambodia Tax=$40,000-$50,000=($10,000) < 0

Losses on machines disposal are $1,000, so these losses are deductible expenses for tax on income (profit).

[1] undepreciated value of fixed asset refers to net book value (NBV) for tax purpose.