id = "depreciation-disposal-after-a-late-change-undone"
title = "A disposal is taken once a late change to an earlier run is undone, on any later day"
rule = "A disposal clears what the asset's runs carry now, so it waits until each run carries at the end of the disposal's month what it carries now. A reversal of an earlier run dated after that month is undone by reversing it, on any open day: the disposal month and the end are then right, and a later month end keeps the change and its correction as they were made."
status = "CONVENTION"
sources = ["ASC 360-10-35-4", "Pacioli 1494, ch. 31"]
tags = ["depreciation", "disposal", "refusal", "reversal", "p3-defect-22"]

[setup]
currency = "USD"
fiscal_year_start = "01-01"
basis = "accrual"
rounding = "half-away-from-zero"

[[setup.accounts]]
code = "1000"
name = "Bank"
type = "asset"

[[setup.accounts]]
code = "1500"
name = "Equipment"
type = "asset"

[[setup.accounts]]
code = "1510"
name = "Accumulated Depreciation"
type = "asset"

[[setup.accounts]]
code = "3000"
name = "Capital"
type = "equity"

[[setup.accounts]]
code = "6200"
name = "Depreciation Expense"
type = "expense"

[[setup.accounts]]
code = "7100"
name = "Gain or Loss on Disposal"
type = "revenue"

# Asset X: 12,000.00, no salvage, 12 months from 2026-01-01 (1,000.00 a
# month; December the final month).
[[setup.assets]]
id = "X"
description = "Asset X"
cost = "12000.00"
salvage = "0.00"
life_months = 12
in_service = "2026-01-01"
method = "straight_line"
cost_account = "1500"
accumulated_account = "1510"
expense_account = "6200"

[[events]]
date = "2026-01-01"
description = "Capital"
lines = [
  { account = "1000", side = "debit", amount = "12000.00" },
  { account = "3000", side = "credit", amount = "12000.00" },
]

[[events]]
date = "2026-01-01"
description = "Bought asset X"
lines = [
  { account = "1500", side = "debit", amount = "12000.00" },
  { account = "1000", side = "credit", amount = "12000.00" },
]

[[events]]
run_depreciation = { asset = "X", period = "2026-01" }

[[events]]
run_depreciation = { asset = "X", period = "2026-02" }

[[events]]
run_depreciation = { asset = "X", period = "2026-03" }

[[events]]
run_depreciation = { asset = "X", period = "2026-04" }

[[events]]
run_depreciation = { asset = "X", period = "2026-05" }

# May's run reversed on Aug 1 (doubted). Its month, and July's, still
# carried it at their ends.
[[events]]
date = "2026-08-01"
description = "Reverse event 7"
reverses = 7

# Disposed of 2026-06-15 for 7,000.00: refused. The disposal clears what
# the runs carry now (January to April, 4,000.00) and would charge May
# again at Jun 15, so June would end carrying 6,500.00 against a
# schedule of 5,500.00. The refusal names May's run and the reversal.
[[events]]
date = "2026-06-15"
dispose_asset = { asset = "X", proceeds = "7000.00", proceeds_account = "1000", gain_loss_account = "7100" }
refused = "depreciation_past_disposal"

# May was right: its reversal reversed on Sep 2 (August may be closed by
# then; any open day undoes it).
[[events]]
date = "2026-09-02"
description = "Reverse event 8"
reverses = 8

[[events]]
date = "2026-06-15"
dispose_asset = { asset = "X", proceeds = "7000.00", proceeds_account = "1000", gain_loss_account = "7100" }

# Hand check (worked without the code): the runs carry 5,000.00 at Jun 30
# and now. Held through Jun 15: 5,000.00 + 1,000.00 x 15/30 = 5,500.00, so
# the final depreciation is 500.00 and the disposal clears 5,500.00. Book
# value 6,500.00; gain 7,000.00 - 6,500.00 = 500.00. August's end carries
# May's reversal (accumulated depreciation a 1,000.00 debit, the expense
# 4,500.00) and September's its correction, as they would without the
# disposal.
[[expect]]
query = "disposal"
asset = "X"

[expect.values]
final_depreciation = "500.00"
catch_up_depreciation = "0.00"
excess_depreciation = "0.00"
accumulated = "5500.00"
book_value = "6500.00"
gain_loss = "500.00"

[[expect]]
query = "balances"
as_of = "2026-06-30"

[expect.values]
"1510" = "0.00"
"6200" = "5500.00"
"7100" = "500.00"

[[expect]]
query = "balances"
as_of = "2026-08-31"

[expect.values]
"1510" = "1000.00"
"6200" = "4500.00"

[[expect]]
query = "balances"
as_of = "2026-09-30"

[expect.values]
"1510" = "0.00"
"6200" = "5500.00"