What are the initial steps in disposing of a non-current asset?

The correct approach to disposing of a non-current asset begins with removing the original cost and accumulated depreciation from the accounting records. This step is essential because it effectively removes the asset from the balance sheet, reflecting that the company no longer owns the asset and has no future benefit from it.

When disposing of a non-current asset, the original cost must be eliminated because it represents the amount initially paid for the asset when it was acquired. Additionally, accumulated depreciation must also be removed since it reflects the total depreciation expense that has been recognized over the asset's useful life. By clearing both amounts from the accounts, the financial statements can accurately show the company's current financial position.

This initial step is crucial as it sets the stage for recognizing any gain or loss on the disposal, which is calculated by comparing the sale proceeds of the asset, if sold, to its carrying amount (original cost less accumulated depreciation).

Other options don't accurately reflect the standard procedures for asset disposal. For example, recognizing revenue or transferring ownership may occur at a later stage, but they should not be part of the initial steps for disposing of the asset.