Treatment of Disposals

jewels.p

I have just attempted the Dec 03 Exam and got totally confused with Disposals. You have to calculate the Depreciation Charge for the year taking into account the Disposal you have made. I have got this wrong in every Exam Paper I have attempted. Is there an easy way to remember how to do this for next week?:confused1:

I know how important Depreciation is in FRA and it is a nightmare for me!:crying:

tallrodney

The correct way to deal with a disposal is to do it in these stages:
1) Credit the asset at cost account and debit the disposal account with the asset at cost value.
2) Debit the accumulated depreciation and credit the disposals account with the accumulated depreciation figure.
3) Debit the bank with the proceeds if it was sold for cash or debit assets at cost account if it was part exchanged. The disposal account should be credited with the proceeeds.
4) Balance if the account to get either a profit on disposal credited to the profit and loss account or debited if the asset was sold at a loss.

rachy1975

jewels.p wrote: »

I have just attempted the Dec 03 Exam and got totally confused with Disposals. You have to calculate the Depreciation Charge for the year taking into account the Disposal you have made. I have got this wrong in every Exam Paper I have attempted. Is there an easy way to remember how to do this for next week?:confused1:

I know how important Depreciation is in FRA and it is a nightmare for me!:crying:

you must remember to look at the dates ....usually there is no depreciation in the year of disposal....and usually a full years in year of acquisition....i kept making the mistake of doin depreciation of the disposal..i remember not to do this if you dont have to by puitting a red line through the asset on the fixed register to remind me it has gone!!!!

:001_smile:

CJC

I've still got the notes I made from when I did this stuff which might be of use.

http://cjcnet.net/wiki/tiki-index.php?page_ref_id=40

jewels.p

CJC wrote: »

I've still got the notes I made from when I did this stuff which might be of use.

http://cjcnet.net/wiki/tiki-index.php?page_ref_id=40

Thanks for that that is really helpful:thumbup1: