disposals/part exchange

waxbutterfly

I cant get my head round these tasks and my exam is on friday....help. i just dont seem to be capable of putting the correct figures in the correct T-Account or knowing what to transfer to P&L . :-( im dreading this question coming up in the exam.

blobbyh

Have a look at this link. About a quarter of the way down it shows various scenarios of disposal with no cash, disposal with cash and disposal with part ex:

http://www.principlesofaccounting.com/chapter%2011.htm

Work out in logical order - I used ADS as an acronym:

Asset: remove from the register e.g. credit asset a/c £10,000
Depreciation: counteract the depreciation accumulated to date: e.g. debit acc dep a/c £5,000
Sale (or proceeds): debit bank a/c £3,000

So now you have £8,000 of debits and £10,000 of credits. The balancing figure of £2,000 is therefore a debit expense in the P&L being the 'loss on disposal of asset'. Gains and part ex's are done similarly - look at the examples given in the link.