Fixed Asset disposal

System
System Posts: 100,537 🤖 Admin 🤖
edited June 9 in AAT member discussion
I may be being a bit thick here, can anyone clarify how I account for a profit from the sale of a fixed asset.
Is it added income
or can I class it as capital introduced? :oops:

i think it is added income!!!


Jack

Comments

  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Fixed Asset disposal

    hi hope this helps but there was something in the aat magazine this month covering this topic i cant remember exactly what but i think you can view this online. Ne
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Fixed Asset disposal

    Thanks for that, as it happens my copy came today not had time to read it yet.

    JackD
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Fixed Asset disposal

    Hi It is me again!!
    I have read the article in Accounting Technician, which I understand aprt from Here we go!!
    There is never any mention of VAT. Surely if you are VAT registered it must be shown somewhere :?:

    Is it the net amount that is put to the profit & loss as added income.

    Jack :roll:
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Fixed Asset disposal

    Hi there

    The profit from a fixed asset disposal is excluding VAT and is shown in the P&L. I usually put it below the depreciation charge line. It is disregarded as income for tax return purposes but then incorporated in the capitial allowance calcs.

    Make sense?

    Sharon
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Fixed Asset disposal

    Don't forget that if you make a profit to add it back in the P&L ie it is a reduction in expenses - I tend to put it in brackets.

    As Sharon says it is excluded from tax comps and sorted out in capital allowances - a balancing charge instead of an allowance.

    Claudia
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Fixed Asset disposal

    Thanks Guys

    Can I run this by you?

    NBV 6371
    Proceeds 7500
    Profit 1129
    VAT does not come into it!!!

    Will I ever the the hang of disposals??? :cry:

    Thanks again
    Jack
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Fixed Asset disposal

    Transfer cost account and provision for depreciation account to '(Profit)/Loss on disposals' account. Also credit the sale proceeds to this account and the profit will show as a negative expense in the P&L, usually immediately below depreciation.

    Add back in the tax comps, just as you would for depreciation and make the appropriate adjustment to capital allowances. You will either have a balancing allowance or, if the asset is in the general pool, just a reduction to your pool available for WDAs.
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Fixed Asset disposal

    Thanks all, I may have to re-cap at year end when I am doing the tax comp :)

    Jack

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