Most ghost assets are not stolen. They are sold or scrapped and never taken off the register.
When a fixed asset is sold or scrapped, charge depreciation up to the disposal date, remove both its cost and its accumulated depreciation, record any proceeds, and post the difference as a gain or loss on disposal. Gain or loss equals proceeds minus net book value at the disposal date.
A machine cost 40,000. Accumulated depreciation at the disposal date is 28,000, so net book value is 12,000. It is sold for 9,500, net of any sales tax.
Loss on disposal = 9,500 − 12,000 = 2,500 loss.
| Account | Debit | Credit |
|---|---|---|
| Accumulated depreciation, machinery | 28,000 | |
| Cash or receivable | 9,500 | |
| Loss on disposal | 2,500 | |
| Machinery at cost | 40,000 | |
| Total | 40,000 | 40,000 |
If it had sold for 15,000, the gain would be 3,000 and would be credited to gain on disposal instead.
An asset scrapped for nothing has proceeds of zero, so the whole net book value is a loss. If you pay to dispose of it, that cost adds to the loss.
The last one is the most common. A disposal form that operations must complete, and an annual physical check, catch it. See what a fixed asset register must include and straight-line vs reducing balance depreciation.
The accounting is the same in the UK and the US. Tax is different: in the UK, disposal proceeds feed into the capital allowances pool and can create a balancing charge or allowance, and in the US, gain on disposal may be subject to depreciation recapture. Both are calculated separately from the accounting gain or loss.
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The Fixed Assets & Depreciation System calculates straight-line and reducing-balance depreciation, stops depreciation at the disposal date with the profit or loss calculated, and ties a full movement schedule back to the register. Excel, no macros, one-time price.
In the income statement, usually within other operating income or as a separate line, not within revenue, because selling assets is not your normal trade.
Treat the trade-in allowance as the disposal proceeds of the old asset, and capitalise the new asset at its full cost, not just the cash paid.
Treat it as a disposal with zero proceeds, so the net book value becomes a loss. If insurance pays out, record the insurance receipt when it is virtually certain, separately from the loss.
Remove the cost and accumulated depreciation of the part that has gone, based on its share of the original cost if it was not recorded separately, and keep depreciating the remainder.
Follow your policy. Common approaches are a full month in the month of purchase and none in the month of disposal, or daily depreciation. Apply the same rule every time.
Last updated 18 October 2026. General guidance for finance teams; check it against your own policies, systems and local rules.