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Post Info TOPIC: Sale of Asset
KAZ


Veteran Member

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Date:
Sale of Asset
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My client recently sold an asset for less than its value.  How do I close down the remaining amount?



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Count1314


Senior Member

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Posts: 236
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You just write down the value of the asset and accumulated depreciation and the difference between these and the bank receipt is a loss on disposal on the P&L.

So.........

Cr Asset (original value)

Dr Accumulated Depreciation (to date)

Dr Bank (sale proceeds)

Cr Loss on disposal (the balance).



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MarkS


Expert

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Posts: 1501
Date:
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Hi Count

The loss on disposal is a Dr entry not Cr.

To add figures to explain the journal

Buy an asset for £1k.  Depreciation to date £200.  Sell for £500.

In the books the asset has a value of £800 (£1k - £200).  It is sold for £500 therefore a book loss of £300 (£800 - £500) has been made.

Journal to records above

                                                            Dr                       Cr

Cost (BS)                                                                     £1000

Accum Depn (BS)                                £200

Bank (BS)                                           £500

Loss on Disposal (P&L)                      £300

 

Total                                                  £1000               £1000

Regards

MarkS



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Mark Stewart CA

http://stewartaccounting.co.uk/

Providing accounting, bookkeeping, payroll and tax services to small and medium sized businesses across Central Scotland and beyond.
Count1314


Senior Member

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Posts: 236
Date:
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Yes of course it is!.....In my haste, I was just trying to balance the debits and credits without using fgiures. Of course you are right and any 'loss' would be a debit!



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