Loss on disposal

System · November 2005

When doing the T account and recognising there is a loss on a disposal i know that you credit that to the p+l but why do you debit it on the trial balance? Chris.

System · November 2005

Loss on disposal

Hi You Dr the P&L as it is a Loss/Expense to the company and sits with all other expense incurred within that period. If you need any more help, please let me know

System · November 2005

Loss on disposal

There's a bit more to it than that BigMan. Example: You have an asset which is at NBV in the accounts i.e Fixed Asset cost (DR on B/Sheet) 5000 Accumulated deprn (CR on b/sheet) 5000 You sell the asset for Ã‚Â£100 You firstly need to take the asset of the books. Do this by DR Accum deprn 5000 CR Fixed Asset cost 5000 Then record the profit on disposal DR Bank (B/sheet) 100 CR Profit on disposal (P&L) 100 It gets more complicated if you still have remaining NBV on the asset. Let me know if you want me to explain that too. Hope it helps :-) Nicky

System · November 2005

Loss on disposal

so how come it goes on the debit side of the TB? is it because the loss is classed as an expense?

System · November 2005

Loss on disposal

If you make a loss then you are reducing the profit so it is a debit (think of it as you would an expense - its money out of the business so its a debit to the P&L). Example Asset with NBV of Ã‚Â£750 Being FA Cost DR 1000 Accum deprn CR 250 You sell for Ã‚Â£500 (thus making loss of Ã‚Â£250). Entries are DR Accum deprn 250 DR Loss on disposal (P&L) 250 DR Bank 500 (the proceeds) CR FA Cost 1000 Does this make it clearer for you ?

System · November 2005

Loss on disposal

Yeah thats great, thanks. Chris.

Loss on disposal

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