There was a disposal in March which I put through but I have been asked to write back the cum depn in April.
The addition was £5,075 in Nov 10 and the disposal was £3,850 in March the depn in March was £169 - how much should I write back and what would my entry be??
Another addition was £26,600 in Sept 10 and it was also disposed of in March for £26,600 the depn in March was £1,330 again what should I be writing back??
Hi, I will try. The key with asset disposals is to use a P&L account for the disposal - Disposal of Assets. This becomes the control account and the remaining balance is either the profit or loss on disposal.
1st entry is to remove cost of asset from BS :- CR Asset account on BS, DR Disposal a/c on P&L 2nd entry is to write back accum depn :- DR Accum Depn BS, CR Disposal a/c P&L
The current balance on the disposal account should now be the NBV of the asset being disposed off.
The final entry is to post the proceeds from the sale of the asset (if there are any). DR Bank(or cash) and CR Disposals a/c on P&L. If the disposals account ends in a CR amount, then there is gain (or profit) on the disposal; if it's a DR, then it's a loss on disposal. On the figures you've given above, I would say you have loss on disposal of £1056.
Your 2nd disposal results in a profit of £1330. Net value in the disposals a/c will now be profit on disposals of assets of £274:- £1330 profit less £1056 loss = £274 profit.
