disposals

System

hi
if a vehicle was purchased at the beginning of a tax year for £800 and then sold before the end of the year for £150 how would this be treated in the accounts and for depreciation in the p and l?

would you add on the 800 as an addition but then take off the 800 as a disposal to get the nbv on bal sheet?
where would the £150 income for the vehicle be?

am looking at some accounts and trying to work out what to do, thought you could only take 650 off as a disposal? am i wrong?

please try to explain and perhaps i will understand what i am trying to ask?!!
i have an opening figure for cost on motor vehicles plus additions and then take off the opening figure for depn charged and then the charge for the year then deduct the 800 to get at the nbv for the new year?

any help?
please.

thanks

System

Re:disposals

Hi, I can't help with depreciation as you haven't said what the policy is ie do they depreciate in the year of disposal?

The entries for acquisition are

DR Motor Vehicle a/c £800
CR Bank a/c £800


The two entries for disposal would be
DR Disposal a/c £800
CR Motor Vehicle a/c £800

DR Bank a/c £150
CR Disposal a/c £150

If there is no depreciation this would leave you with a loss on sale (balancing figure) of £650 in your disposal a/c, which would be an expense in your P and L or Income Statement.

I was taught that for disposals you need to adjust the asset and depreciation accounts so that it is as if the vehicle never existed, which is why you have to take out the full cost in the MV account. You would also cancel out all accumulated depreciation in the same way (DR Acc Depn and CR disposals)

Hope this is useful..........but I did have a glass of wine or two last night so if it makes no sense, sincere apologies!

Jackie