Journal _ disposal of a fixed asset

Rune
Rune Feels At HomeRegistered Posts: 91
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...:lol:

Comments

  • MOHMEDSALIM PATEL
    MOHMEDSALIM PATEL Well-Known Registered Posts: 184
    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
    Rune Feels At Home Registered Posts: 91
    Thanks so much yes it does help!
  • calzjames
    calzjames Registered Posts: 1
    THANK GOD FINALLY MAKES SENSE! exam on wednesday :(
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