Gain on disposal of Fixed assets as per Law on Tax

Lesson Summary-Gain on disposal of fixed assets as per Lax on Cambodia Tax

Gain on disposal of fixed assets as per law on Cambodia Tax is taxable income.

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

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

Gain 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 ABC has a generator, and beginning tax undepreciated value of generator for 2019 is $5,000. On 30 November 2019, ABC disposed this generator and proceed from disposal is $5,600.

Required

Calculate gain (loss) on fixed asset (generator) disposal per law on Cambodia Tax.

Answer

Gain on disposal of fixed assets= proceed from fixed asset disposal – undepreciated value of fixed asset per law on Cambodia Tax=$5,600-$5,000=$600 > 0

Gain on generator disposal is $600, so this amount is subject to tax on income(profit) 20% ( standard rate).

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