Hypothetical #1 -- say a company is in the business of making auto wheel rims and uses lathes in the manufacturing process. If they sell off a used lathe, then I have always considered that as a sale of fixed assets, and the difference between sale proceeds and the FA NBV is a gain/loss on sale of asset -- usually some kind of "other income".
Hypothetical #2 -- a company is in a business relating to speciality scientific equipment. They sell, rent, repair, and provide in-field services using skilled labor and some of the specialty equipment. They do not manufacture. So they usually buy the equipment as fixed assets (for rent or for in field services), as well as buy some specifically to resell at a profit (those are usually accounted for as a quick buy/sell, or left in inventory for a month or two until sold). However, this company often, and with little identity control, also sells off rental assets or field service equipment if a customer asks for a deal.
Since the "sale of scientific equipment" is part of their ongoing business model and objective, are these fixed assets sales now "Revenues/COGS", or still "Other income" as a gain/loss on disposal? I would argue it goes into revenues, since "sales of equipment" is a key business objective. Does it really matter if it went into fixed assets or inventory first -- I say no, but I welcome support or counter arguments.
We are not CPA-reviewed or audited, but the bank requires "GAAP" financials.
Just to make my life more complicated, this real world client of mine also removes small to major parts of one piece of equipment and puts it on other fixed asset items to enhance or repair them, or may sell a removeable part of the equipment, say a camera head. No good tracking system for that process -- so the accounting? Don't ask! By the way -- these aren't cheap items -- $10,000 to $50,000 a piece.
Comments for/against or pointers to definitive GAAP on this are welcomed. (Maybe I should ask, what do Avis and Hertz do with their rental car fleet at point of purchase and later at time of used sale?)