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carweb
March 12, 2025
Question

sale of a company

  • March 12, 2025
  • 1 reply
  • 0 views

Hi:

I am use to having asset sales of companies,  There has been a sale of the company.

 

When removing the assets and liabilities from the books, do I also remove retained earnings and then calculate the gain/loss.

 

Thank you.

 

 

1 reply

Rainflurry
Rainflurry
March 12, 2025

@carweb 

 

No, retained earnings (RE) is not part of gain/loss calculation.  Gain/loss is calculated based on the net book value of the assets sold.  The gain/loss is the sale price of each asset sold less that asset's net book value.  RE is used to settle any outstanding liabilities and to distribute to shareholders.     

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