How are gains and losses on the disposal of assets typically reported?

When an entity disposes of an asset, the gain or loss resulting from the disposal is typically reported on a net basis. This means that the gain or loss is calculated by subtracting the asset's carrying amount (book value) from the proceeds received upon disposal.

The net gain or loss is then reflected in the income statement as part of the entity's operating results. This treatment provides clarity and accuracy in financial reporting by showing the actual impact of the asset disposal on net income. Therefore, users of the financial statements can easily understand the financial implications of asset disposals and how they contribute to the overall performance of the entity.

In contrast, reporting gains and losses on a gross basis would mean representing both the proceeds and the carrying amount separately, which is less common for disposals as it can complicate the financial statements. Including disposal gains or losses as part of comprehensive income would be inconsistent with how gains and losses are generally treated in financial reporting. Lastly, reporting only in the notes would fail to highlight the importance of these gains or losses, which are relevant to assessing the company's financial performance.