Final answer:
The gain or loss from disposing an asset under the group method is recorded in a 'Gain on Disposal of Assets' or 'Loss on Disposal of Assets' account. The amount recorded reflects the difference between the net book value of the asset and the sale proceeds.
Step-by-step explanation:
When an asset being depreciated under the group method of depreciation is disposed of, the gain or loss on the disposal is recorded in the accounts based on company-specific accounting policies. Generally, businesses maintain a group depreciation account for the assets being depreciated under the group method. On disposal, the asset's cost and its accumulated depreciation are removed from the balance sheet. The difference between the asset's net book value and the sale proceeds is recognized as a gain or loss on disposal of assets. For example, if an asset originally costing $5,000 with accumulated depreciation of $3,000 is sold for $2,500, the transaction would involve removing the asset's cost and its accumulated depreciation from the books and recording a gain or loss. In this case, a loss of $500 ($(5000 - $3000) - $2500) would be recorded on the gain or loss account specific to disposed assets. Different companies can have different names for this account, but common titles include 'Loss on Disposal of Assets' or 'Gain on Disposal of Assets.' These entries help to accurately reflect the company's financial position and results of operations in its financial statements.