Journal _ disposal of a fixed asset

Rune

Has any one got an easy way of remembering how to do the enties of a disposal of a FA in to the journal.... I am always leaving something out? !!!:001_unsure:..... Please help an old lady out...Well I feel old today...

MOHMEDSALIM PATEL

This might be helpful.

Do not panic it is as simple as A,B,C
just follow step by step

First remove the cost of fixed asset which is going to be disposed off.To do so journal entry is

Disposal account DR [cost value]
Fixed assets at cost account CR [again cost value]

Second remove the total accumulated depreciation for the same fixed asset.In most scenario we have to evaluate the total accumulated depreciation for it.
The way to calculate, find out when did we purchase the the asset and depreciation charge and method [reducing method or straight line ] multiply by the year we have had the asset.] but do not include the year of disposal.]
journal entry for it as below.

Accumulated depreciation account DR
Disposal account CR

Disposal proceed need to consider and should be treated as follow.

Bank account DR [if we received cash or cheque for it.
Disposal account CR

If debit balance greater than credit it is a loss on Disposal and journal entry for it.
Profit and loss account DR
Disposal account CR

IF it is a credit side bigger than debit side it is a profit on disposal and journal entry should be as below

Disposal DR
Profit and loss account CR

I hope that will help.If not I am sorry.

Rune

Thanks so much yes it does help!

calzjames

THANK GOD FINALLY MAKES SENSE! exam on wednesday