id = "depreciation-disposal-before-a-later-run"
title = "A disposal dated before a later month's run is refused until that run is reversed"
rule = "A disposal is refused while a run of a month after the disposal's stands: crediting it back at the disposal day would leave the disposal month's accumulated depreciation a debit and its expense short at the month's end. Once that run is reversed, the disposal takes the depreciation of the days held."
status = "CONVENTION"
sources = ["ASC 360-10-35-4"]
tags = ["depreciation", "disposal", "refusal", "later-run", "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" }

[[events]]
run_depreciation = { asset = "X", period = "2026-06" }

[[events]]
run_depreciation = { asset = "X", period = "2026-07" }

# Disposed of 2026-06-15 for 7,000.00, after July's run: refused, naming
# July's run.
[[events]]
date = "2026-06-15"
dispose_asset = { asset = "X", proceeds = "7000.00", proceeds_account = "1000", gain_loss_account = "7100" }
refused = "depreciation_past_disposal"

# July's run reversed, dated in July.
[[events]]
date = "2026-07-31"
description = "Reverse event 9"
reverses = 9

[[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): January through June carry
# 6,000.00 once July's run is reversed. Held through Jun 15: 5,000.00 +
# 1,000.00 x 15/30 = 5,500.00, so June's run posted 500.00 past the
# disposal day. Book value 6,500.00; gain 7,000.00 - 6,500.00 = 500.00.
# Had the disposal taken July's run back at Jun 15 (1,500.00 credited),
# June would end with accumulated depreciation a 1,000.00 debit and
# 4,500.00 of expense.
[[expect]]
query = "disposal"
asset = "X"

[expect.values]
final_depreciation = "0.00"
catch_up_depreciation = "0.00"
excess_depreciation = "500.00"
accumulated = "6000.00"
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 = "2026-07-31"

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