What is the impact of disposing of a non-current asset on the Statement of Financial Position?

When a non-current asset is disposed of, it is removed from the Statement of Financial Position, which reflects the company's financial position at a specific point in time. This means that there will be no balances related to the disposed item on the statement following the disposal.

The disposal effectively eliminates the carrying amount of the asset from the total assets. If the asset had any accumulated depreciation, that will also be removed alongside the asset, resulting in no remaining value associated with that asset on the balance sheet. The impact of this is significant as it reflects the company no longer having the asset, aligning with the principle that only assets owned at the reporting date should be included on the Statement of Financial Position.

Additionally, the impact on the overall financial position is that while total assets will decrease, it will not automatically reflect an increase in liabilities or have any direct relationship to the total liabilities of the company. The financial statement would simply not show any balances related to that specific disposed asset anymore.