Sometimes a company gets rid of a fixed asset before the end of its useful life (perhaps it is equipment that has broken and needs to be thrown out). This is called a retirement and is similar to the disposal of a fixed asset, except the company is not receiving any cash.
For example, let's say that a company purchased a work truck for $50,000 and took $32,000 of depreciation for the truck over a period of several years. The truck broke down before the end of its useful life, however, and the company decided it wasn't worth it to have the truck repaired. Thus, the company gave the truck to a junkyard and received nothing in return. To account for this, the company would (a) reduce its property, plant, and equipment account by $50,000, (b) reduce its accumulated depreciation by $32,000, and (c) record a loss of $18,000. The loss would reduce the company's net income on the income statement.
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