Fixed asset disposal

I'm quite confused. I'm basically doing a question where the disposal of the asset is accompanied by part exchange. I understand what I'm doing with it except the part exchange is for £4700 (inc VAT). I've taken the £700 VAT out of the amount and credited it to the VAT account to claim it back...but I don't know where to debit.

The part exchange wasn't given in cash it was merely taken off the total amount due on the invoice for the new asset. I just can't think what to do with the VAT in regards to the debit side :confused1: ...any help would be greatly appreciated.

Thanks

Mouse x

Comments

  • coojee
    coojee Registered Posts: 794
    Hi Mouse

    You need to think of the whole transaction rather than just trying to post the £700. The complete journal is DR Fixed Asset (with cost of new asset), DR VAT (if there is any on the new asset) CR Bank/Creditors (with balance payable on purchase of new asset, CR Disposals with £4000 and CR VAT with £700. For example, if the new asset is £10,000 plus VAT then journal is:

    DR Fixed Asset Cost 10,000
    DR VAT 1,750
    CR Bank 7,050
    CR Disposals 4,000
    CR VAT 700
  • GreenMousey
    GreenMousey Registered Posts: 154 ? ? ?
    I've done all the other transactions but I'm stuck with 700 CR on my VAT that doesn't have an equal debit entry...
    Am I missing something here? (Other than a brain) I've just never come across VAT on the part exchange amount before and, as I said, all the other entries are fine, I understand it's just the dr for the 700 that I can't seem to place.
  • coojee
    coojee Registered Posts: 794
    Have you seen my reply at all? I think it explains what you need to know.
  • Bluewednesday
    Bluewednesday Registered Posts: 1,624
    The VAT won't have an equal debit entry, it is part of the whole journal.

    Coojee's journal is correct so if you haven't got those entries (even in a slightly different format) then you haven't got it right, what are your other entries?
  • GreenMousey
    GreenMousey Registered Posts: 154 ? ? ?
    My apologies, it was late and my brain went AWOL. I'd not accounted for the VAT on the new asset...it all makes sense now, thank you for your help, it's very much appreciated. :)
Privacy Policy