Disposals

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louise
louise Registered Posts: 49 Regular contributor ⭐
in AAT Level 3 (Level 6 in Scotland)
i need help, understanding disposals.

is there an easy way in remebering what to do?

please help meeeeeee
:confused1:

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  • visha
    visha Registered Posts: 218 Dedicated contributor 🦉
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    There are only 3 entries to be made in a disposal a/c.

    1 - transfer the debit balance from Fixed Assets at cost a/c to Disposal a/c

    2 - transfer the credit balance from Accumulated Depreciation a/c to Disposal a/c

    3- Credit Disposal a/c with Sale proceeds and Debit it either in

    ............................................................................................a) Bank if cash received
    ............................................................................................b) Fixed Asset a/c if payment for part exchange
    ............................................................................................c) Sundry creditor if payment against outstanding invoice.
  • clazaridis
    clazaridis Registered Posts: 30 Regular contributor ⭐
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    Disposals, part exch

    Hi,
    I'm also having trouble with disposals, especially on the latest simulation we have done with the part exchange!

    I followed exactly how it was done in the osborne book but still got part of it wrong??

    Claire
  • visha
    visha Registered Posts: 218 Dedicated contributor 🦉
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    The journals you need to do is what I have mention above!

    1) Debit DISPOSAL a/c with cost say...........£10,000
    ...Credit Motor Vechicle a/c at cost..............................£10,000

    2) Debit MV Accumulated dep a/c say...........£ 6,500
    ...Credit DISPOSAL a/c...............................................£6,500

    3) Debit MV @ Cost with Part X value say £2,500.............................IF balance of new car Debited to MV at Cost a/c
    Credit DISPOSAL with..............................................£2,500

    OR

    ) Debit Sundry Creditors with Part X value say £2,500.............................IF Full value new car Debited to MV at Cost a/c
    Credit DISPOSAL with..............................................£2,500




    When you post these entries to the above accounts it will start to make sense.
  • numberjunky
    numberjunky Registered Posts: 88 Regular contributor ⭐
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    The only real tricky thing to remember on a Disposal is that it is very likely that you will have to calculate the Accumulated Dep'n for the ONE asset you are disposing of. So if the Trial Balance says there is £13546 Cr in the Acc. Dep'n Account of course not ALL of that goes to the Dr side of Disposal a/c
    if you have more than one asset.

    You will usually get some info saying that the 'asset' was puchased 3 years ago at a cost of 8000 and was to be depreciated at a rate of 25% reducing balance. Now you have a calculation to do before you can make the DEBIT entry to Acc. Dep'n and CREDIT the Dispoal A/c.

    It's just practise, practise, practise.

    Good luck.

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