When fixed assets are sold or disposed of otherwise, their recorded value is removed from the property accounts and the valuation reserve is reduced by the accumulated allowances for depreciation and amortization for those assets.
Gain or loss, measured by the difference between:
Book value (Cost less accumulated depreciation) | and | Proceeds from sale or salvage |
Costs of removal or dismantling | Insurance proceeds |
is credited or charged to current operations.
Cal. Code Regs. Tit. 2, § 1061.6