How is derecognition of an asset recognized in the financial statements?

What will be an ideal response?

Answer: Derecognition requires that the firm remove all related accounts from the ledger, including the asset's cost and its accumulated depreciation. Before removing the asset from the ledger, the firm must bring the accumulated depreciation up to date at the time of derecognition. Because firms generally make an entry for depreciation expense and accumulated depreciation only when the financial statements are prepared, the firm must recognize any depreciation expense related to the use of the asset from the last financial statement date until the date of derecognition.