Depreciation!!

Jossii
Jossii Registered Posts: 13 New contributor 🐸
in AAT Level 3 (Level 6 in Scotland)
This subject has my head spinning, why can't i remember the formula for the 'disposal' element :crying::001_unsure:

Comments

  • PhilW
    PhilW Registered Posts: 32 Regular contributor ⭐
    I cant answer the question as to why you can't remember but what are you having difficulty with?
  • jen
    jen Registered Posts: 13 New contributor 🐸
    Hi
    The only way I can hink to explain is with an example, so, for example:

    You sell a motor vehicle for £5000 which has a net book value of £4000, original cost £10000 so depreciation to date is £6000.

    Cash Receipt for Sale
    DR Cash Book £5000
    CR Motor Vehicle Disposal Account £5000

    Journal in main ledger
    CR Motor Vehicles £10000
    DR Provision for depreciation £6000
    CR P & L £1000
    DR Motor Vehicle Disposal Account £5000

    Hope this helps
    Jen
  • thoms04
    thoms04 Registered Posts: 34 Regular contributor ⭐
    I just rememeber

    1. Journal the Asset into the Disposal Account
    2. Journal the Accumulated Depreciation into the Disposal Account
    3. Enter the cash recieved from the sale
    4. Balance off the account

    A debit balance indicates an expense(loss) and a credit balance income(profit)

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