Disposal of fixed Assets Journal entry

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:28AM in AAT student discussion
I have been doing the Delft Simulation and come across disposal of fixed assets, I understand how to do the journal for the purchase but the disposal side of it I cant understand. I got the model answer for the journal and it give Debit Acum Depn Motor vechile 7000, Debit Disposal 3500 and Credit Motor Vechile 10,500. I dont understand why you do it this way when the Disposal T account is Debit Motor Vechile 10500, Credit Accum Depn 7000, Credit Sundry Creditors 2500 and Bal C/d 1000. Please can someone explain ?

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    Disposal of fixed Assets Journal entry

    Hi Daniel<BR><BR>I dont understand this either....my lecturer is no help to me. I have done the whole year on my own, and now I am stuck also.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Disposal of fixed Assets Journal entry

    Hi <BR><BR>Your model answer does seem confusing. Normally on the disposal of a fixed asset (motor vehicle in this instance) the procedure would be Credit Motor Vehicles at cost with the original cost of the vehicle debit the disposal account. <BR>Debit the accumalted depreciation with the depreciation to date credit disposal account. <BR><BR>If a profit was made on the sale then it would be debit bank credit disposal account. The carried forward amount in the disposal account being a credit balance to the profit and loss eg proceeds from sale of vehicle.<BR><BR>If a loss had occured on the sale of the vehicle eg Vehicle cost £10,000 less accumalted depreciation £2000 = value £8000 sold £6000. Then the entry for the £6000 would be credit disposal £6000 debit profit and loss account (loss on disposal of fixed asset with £2000 this would be the carried forward amount in the disposal account.<BR><BR>In your example rather than accounting for the loss on disposal in the profit and loss account the loss has been accounted for as a sundry creditor. With only part of the loss being accounted for in this period a balance of £1000 carried forward I don't understand why this would be done but if none of the above makes any sense to you and I can help email me with the full details of the disposal as set out in your question and I will try and help<BR><BR>Regards<BR>Roz<BR><BR>roztench@blueyonder.co.uk

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