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Statement of profit or loss (extracts) for the years ended 31 December
Expenses: TZS
31.12.2022 Tractors depreciation 4,500,000
31.12.2023 Tractors depreciation 1,000,000
31.12.2024 Tractors depreciation 1,000,000
FOR ONLINE READING ONLY
Statement of financial position (extracts) as at 31 December
Non- current assets 2022 2023 2024
TZS TZS TZS
LANGUAGE EDITING
Tractors (cost value) 80,000,000 144,000,000 144,000,000
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Less: 4,500,000 14,500,000 24,500,000
Accumulated depreciations on tractors
Carrying amount 75,500,000 129,500,000 119,500,000

Disposal of property, plant and equipment
Disposal of non-current assets refers to the process involved in derecognising the non-
current assets from the books of accounts. When PPE are acquired, they are recognised
in the books of accounts and when they are disposed, they are derecognised from the
books of accounts. The disposal can be due to winding up of the useful life of an asset
or asset becoming obsolete or any other genuine reason. The following subsections
discuss the nature, procedures and accounting treatment associated with the disposal of
tangible non-current assets.

The nature of disposal of property, plant and equipment

A non-current asset can be disposed of at any time from when it is acquired to the end
of its useful life, despite the intention to use it to the end. A disposal of PPE can be
done through discarding, selling or exchanging with another non-current asset. From
accounting perspective, the disposal of PPE requires eliminating it from the books of
accounts. It involves passing journal entries that results into completely removing the
asset together with its corresponding records from the statement of financial position.
This process is known as derecognition, which is the opposite of recognition made
when the asset was acquired for the first time. Derecognition of a PPE is also required
when it is stolen or lost because of unforeseeable events like fire or theft. The overall
accounting concept behind disposal is to reverse the records associated with the asset,
including accumulated depreciation, in the books of accounts.

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