Final answer:
In accounting, when a composite asset is sold or retired, the asset is removed from the company's books and any gain or loss is recognized by comparing the sale proceeds to the net book value.
Step-by-step explanation:
When a group or individual composite asset is sold or retired, the accounting treatment involves removing the asset from the company's books and recognizing any gain or loss on the transaction. This gain or loss is calculated by comparing the sale proceeds (if any) to the asset's net book value, which is the original cost minus accumulated depreciation. The composite asset method groups together similar assets with the same life spans for the purposes of depreciation, which simplifies the accounting process. When retiring an asset without sale, a loss equal to the asset's net book value is recognized.