How should depreciation and loss on the sale of assets be accounted for?

Question

Accepted Answer

Depreciation is allocated over the useful life of an asset, while loss on sale of assets is recognized in the period of sale.

Depreciation is a systematic allocation of the cost of an asset over its useful life to reflect its consumption, wear and tear, or obsolescence.
Loss on the sale of assets occurs when the selling price of an asset is less than its carrying amount on the balance sheet.
Depreciation expense is recorded on the income statement, while loss on sale of assets is also recognized on the income statement as a separate line item.
Depreciation is a non-cash expense, while loss on sale of assets involves an actual cash outflow.
Both depreciation and loss on sale of assets impact the financial statements and should be accounted for in accordance with relevant accounting standards.

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