Disposals

lmr72
lmr72 Registered Posts: 10 Regular contributor ⭐ ? ⭐
Hi

Please could some one help me. I'm strugling getting to grips with disposals.
Please could some tell me simply the journal for an aquisition & disposal.

:confused1::confused1:

Thanks

lmr

Comments

  • Rachey
    Rachey Registered Posts: 589
    lmr72 wrote: »
    Hi

    Please could some one help me. I'm strugling getting to grips with disposals.
    Please could some tell me simply the journal for an aquisition & disposal.

    :confused1::confused1:

    Thanks

    lmr

    When you dispose of an asset it's:

    CR fixed asset
    DR disposals with original cost
    DR disposals with accumulated depreciation
    DR disposals with sale proceeds

    Fill in the blank in the disposal account with the loss or gain.

    There is a fantastic e-learning link on the AAT website for Unit 5, it explains disposals along with many many other things.

    Good luck! :thumbup1:
  • crispy
    crispy Registered Posts: 465 Dedicated contributor ? ? ?
    Hello,

    To show an easy example:

    Asset at Cost of £ 10 with Accum. Depreciation of £ 5 is sold for £ 4. Now without even looking at journals it is easy to see a loss on dispoal of £ 1.

    The journals would look like:

    1st Remove Asset at Cost
    Dr Dispoals £ 10
    Cr Asset at Cost £ 10

    2nd Remove the Accumulated Depreciation
    Dr Accum. Depreciation £ 5
    Cr Dispoals £ 5

    Last - deal with the proceeds
    Dr Bank £ 4
    Cr Dispoals £ 4

    Draw up the T Account and the disposals should have a brought down balance of £ 1 on Debit side (ie: a loss)
  • crispy
    crispy Registered Posts: 465 Dedicated contributor ? ? ?
    Opps don't know what happened to my 's' key - hope you understand anyway:001_smile:
  • lmr72
    lmr72 Registered Posts: 10 Regular contributor ⭐ ? ⭐
    Thanks for your help.

    I will try to get my head around it.
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