Depreciation!!

Jossii

This subject has my head spinning, why can't i remember the formula for the 'disposal' element :crying::001_unsure:

PhilW

I cant answer the question as to why you can't remember but what are you having difficulty with?

jen

Hi
The only way I can hink to explain is with an example, so, for example:

You sell a motor vehicle for £5000 which has a net book value of £4000, original cost £10000 so depreciation to date is £6000.

Cash Receipt for Sale
DR Cash Book £5000
CR Motor Vehicle Disposal Account £5000

Journal in main ledger
CR Motor Vehicles £10000
DR Provision for depreciation £6000
CR P & L £1000
DR Motor Vehicle Disposal Account £5000

Hope this helps
Jen

thoms04

I just rememeber

1. Journal the Asset into the Disposal Account
2. Journal the Accumulated Depreciation into the Disposal Account
3. Enter the cash recieved from the sale
4. Balance off the account

A debit balance indicates an expense(loss) and a credit balance income(profit)