Question about loss/profit on disposal

[skiddy]

If a question were to ask: why is a profit on disposal revenue? How would you word it, referring to the definition of revenues. And visa versa for losses/expenses. Simple question that got me stumped -- thanks.

[MaddehZ]

if you sold it for cash it is an inflow of eco benefit, increase assets and oe

if you traded it in, it is a savings in outflows, decreasing liabilities and oe

due to overdepreciation, business recognised too much dep over the life of the asset due to underestimated useful life or residual value

[skiddy]

yeah but i mean if you sold it for cash but at a loss (you sold it for less than its carrying value) is it still revenue?
and same thing for a trade-in: if you traded a non current asset in it is a reduction in outflow in the form of a decrease in liabilities, but is it still that if you traded it in for less than its carrying value?

[skiddy]

also, what would your response be to the following question:

Explain why the disposal of asset account is closed off at the end of the period


i said to transfer to profit or loss on disposal to the profit and loss summary account so an accurate profit figure can be determined and to reset the disposal of asset account to a zero balance in preparation for any disposals in the next period?

[MaddehZ]

oh, i hear what you mean

 A profit is always revenue and a loss is always an expense

your response is correct