The mid-month convention also applies to the disposal of an asset. This means that an asset that is disposed of on October 25 will be assumed to have been disposed of in the middle of October. If an asset is disposed of on October 3, it is also assumed that the asset was disposed of in the middle of October. In either situation, depreciation will be recorded for half of the month of October.
The mid-month convention is pertinent for the income tax depreciation for certain property. You can find more on this in the Internal Revenue Service Publication 946.
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