sarahuk3 Registered Posts: 31 Regular contributor ⭐
Hi Everyone,

I am studying depreciation and disposals at the moment and cannot find any literature on the following:

If I depreciate a fixed asset for the year and the nbv calculates as nil, do i enter this as normal in the main ledger?

Thank you



  • phunkyphantom22
    phunkyphantom22 Registered Posts: 166 Dedicated contributor 🦉
    Can you explain your question in a little more detail please? What do you want to enter in the main ledger?

    Fixed assets are recorded at cost on purchase - this amount is recorded in the fixed asset account on the balance sheet.

    DR Fixed asset a/c
    CR Bank

    The cost of the asset is then split across it's useful life i.e. £1,000 computer depreciated over 3 years would be a depreciation cost to the P&L of £27.28 per month (1,000/36). The net book value will be nil at the end of the 3 years as the cost has been fully depreciated and the asset has reached the end of it's useful life meaning it's value should be nil.

    However if you were to sell the asset after 12 months, it would have a positive net book value as it has not been fully depreciated. The NBV would be £672.64 (£1,000 less £327.36 which is 12 months of depreciation).

    Does that make sense? Just ask me if you have any more Q's.
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