Disposal

MWAUGH1983
MWAUGH1983 Trusted RegularRegistered Posts: 420
Hi All,

I have AP I next monday and im dreading the disposal's bit. Does anyone have a good way of remembering this?

Cheers in advance
Martin

Comments

  • PGM
    PGM Font Of All Knowledge Registered Posts: 1,954
    Sorry, whats AP?

    I assume you mean asset disposal? Disposal accounts being the bit you're struggling with?
  • Diddy Mau
    Diddy Mau Well-Known Registered Posts: 238
    AP 1
    Accounts Preperation 1, this is one of the exams in AAT level 3.
    If I remember, one part was a fixed asset register with boxes for disposal, and one with journals.

    Sorry, I dont have a way to easily remeber this. but if your any good with T accounts then this will help when working thisng out.

    Good Luck
  • PGM
    PGM Font Of All Knowledge Registered Posts: 1,954
    Thanks, it was probably DFS to us old timers ;)

    The disposal account is the key one;

    Credit the asset account with the full asset original cost, other entry goes in the disposal account

    Debit full value of depreciation provision, other entry being disposal account.

    The final entry, is to put the sale amount into the disposal account (other entry being the bank)

    The balance of the disposal account is then the amount charged to P&L to make it balance.
  • Bluewednesday
    Bluewednesday Font Of All Knowledge Registered Posts: 1,624
    To add to PGM's fab answer, I like to think of it in steps

    First get the asset out of the accounts as if it was never there,

    then deal with any additions through part exchanges

    then clear the disposal account

    I still think of it that way when I do it in practice.
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