What does profit on disposal of a non-current asset indicate?

Profit on disposal of a non-current asset indicates that the proceeds received from selling the asset exceed its carrying value on the balance sheet. The carrying value reflects the asset's original cost minus any accumulated depreciation or impairment. When a business sells an asset for more than its carrying value, it realizes a profit. This profit indicates that the asset has either appreciated in value or that the company effectively utilized the asset during its lifespan, leading to cost recovery and a financial gain from the sale. Such profits can positively impact the company’s financial performance and may influence future investment decisions or the company's overall valuation.