Disposal of Asset (Loss) Sage

Burnsy

I've managed to get myself confused when disposing of assets this month for the first time in my job.

I know the journal entries for loss of an asset but the confusion comes with Sage and what it can and can't do. If I was selling an asset and making a profit I would put it in Sale of Assets (Nominal code 4200), it would show up in Sales. If there is a loss on the asset, I'm of the opinion that I can't place it here because it wouldn't conform to UK GAAP as the loss needs to be shown as an expense.

I had hoped to have a seperate row for Disposals but can't because of the limitations within Sage - apparently I can't without setting up a new chart of accounts which I would like to avoid.

Is my thinking sound or alternatively can I have a negative figure showing in Sale of Assets?

trini

Hi Burnsy

You could creat a new nominal code i.e. 8005 name it Profit/Loss on disposal of fixed assets, then it would appear in the accounts as an expense.

Burnsy

Thanks for that trini

Nilesh Mandvia

Disposal of Asset

Burnsy

I think you are getting confused between nominal code of Sale of Asset and profit and loss made on disposal of asset.

Regardless whether you made a profit or loss, you can enter invoice (selling asset) to nominal 4200. But as this is not a sale of goods or services you provide, it is simply a disposal of an asset. So you need to off set this amount against cost of Asset account.

You have to remember, when you dispose an asset, if you have claimed VAT when you purchased the Asset, you must pay the Vat on Sale value of an asset.

I generally do the following to dispose of an asset.

For example you are selling plant and machinery

Cost of machine is £10,000 (original cost)

Cumulative Depreciation £5,000

Sold for £4,700 (amount received)

First step is to do sales

Dr Customer (Sales ledger)\Bank £4,700
Cr Sale of Asset (4200) £4,000
Cr VAT (Sales Tax Control Account £ 700

Now you need to remove the asset from the pooled assets. (Asset register)

Cr Plant and Machinery (Asset account 0020) £10,000 (Original cost)
Dr Sale of Asset (4200) £ 4,000 (Net amount)
Dr Plant and Machinery Dep. (dep 0021) £ 5,000 (Cumulative Dep)
Dr Profit or loss made on sale of asset (i.e. 8005) £1,000 (Loss made on sale of an asset (Original cost less cumulative depreciation less sale value, resulting amount either is (profit) or loss.

As you can see, everything is accounted for sales for vat purpose, removing asset from the asset register, taking care of cumulative depreciation. Also, if you do not get paid straight way, then that can be taken care by opening sales ledger account and raise invoice. When you get paid just post receipt on to sales ledger.

Nilesh

DaveP

..so basically what Trini said then. Use code 8005.

Nilesh Mandvia

Is it?

Is it really same as what Triny said?

Nilesh