fixed Assets

Richard08Richard08 New MemberPosts: 12Registered
Hi there,

I was wondering if you could kindly help me with this query. I have recieved a cheque payment from insurance company for £5150.00 company in settlement for a claim made for a Car which had to be written off.

What are all the entries that will have to be made in the books?

This is what i think please let me know if i am going wrong.

With the original purchase price of vehicle

CR - Vehicles B/S(balance sheet)
Dr - Motor Vehicle Depreciation B/S


With the cheque:

Dr - Bank
Cr - ??? P/L

What entries do i make to take care of VAT made on original purchase?

Do i make any entries in the profit and loss account as the vehilce had been depreciated?

Your help would be much appreciated.

Thank you



  • BluewednesdayBluewednesday Font Of All Knowledge Posts: 1,624Registered
    Your opposite entry to the bank for the cheque receipt is to the disposals account.

    You do not need to account for the VAT if it was not reclaimable (which it won't be if it was a normal car).

    The other journals you will need is:

    Dr Accumulated motor vehicles depreciation with the depreciation charged on that one vehicle
    Cr motor vehicles asset account with the original cost.
    Then either debit or credit the disposals account with the difference.

    The balance on the disposals account will then be either debited or credited to the loss/gain on disposal of fixed assets.

    If you can provide the actual figures I can give you all the journals. Please feel free to pm if you would rather not have the figures in the public domain.
  • Richard08Richard08 New Member Posts: 12Registered
    Thanks for your help. I cannot see a disposal of fixed asset account in the system. Is there anyway of doing these entries without involving the disposals of fixed asset account. By looking at how it was done previously I think what they have done is the following:

    With Original cost
    Cr - Vehicles (B/S)
    Dr - Gain/Loss on Fixed asset disposal (P/L)

    For Depreciation provision to date

    Dr - Depreciation Vehicles (B/S)
    Cr - Gain/Loss on Fixed asset disposal (P/L)

    With cheque received

    Dr - Bank (B/S)
    Cr - Gain/Loss on Fixed asset disposal (P/L)

    So in each case the other side of the entry is to the profit and loss account.

    Is this viable?


  • BluewednesdayBluewednesday Font Of All Knowledge Posts: 1,624Registered
    Yes you can do that.
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