disposal unit 5

meibaker

what's the journal entry for this?
original cost 2000
NBV at the time of disposal 1024
proceeds nil
not sure how to treated the proceeds as nil, is this means the item been scrapped for nothing?

Bluewednesday

Take it step by step.

First - remove asset from the asset account so that will be
Dr Disposals 2000
Cr Asset account 2000

Then remove the depreciation
Dr Accumulated depreciation (2000-1024) 976
Cr Disposals 976

So the disposals account has got a debit balance of 1024 in it. To clear this:
Dr loss on disposals of tangible fixed asset 1024
Cr Disposals 1024

You are right in saying that the asset was scrapped or given away - there were no proceeds on disposal.

meibaker

thanks for that.