Accounting -Buying and Selling a non-current Asset
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description
This presentation has been developed for embedding on a wiki, the procedures in accounting for recording the buying and selling of a non-current asset for my year 12 Accounting students.
Transcript of Accounting -Buying and Selling a non-current Asset
Why might we sell a non-current asset?
Not a stock item. Why?
Requires general journal entry
Sundry Creditors
Disposal of Assets
General Journal
Date DetailsGeneral Ledger
Subsidiary Ledger
Debit Credit Debit Credit Vehicle 35000 gst 3500
Creditor - Best Cars 38500
The General Journal Entries
Disposal of Non-current AssetsAssociated conceptsHistorical CostDepreciationAccumulated Depreciation
Asset may be scrappedSold for cashTraded in on a replacement asset
It needs to be removed from the firm’s books
Transfer assets’ historical cost to the Disposal of Asset account
Transfer accumulated depreciation to Disposal of Asset account
Show amount received from sale of asset in Disposal account
Close the Disposal of Asset account to the Profit or Loss on sale of the asset.
Item is not popular therefore little demand
May be obsolete technologically (eg computer)
It may be damaged or severely marked
The accumulated depreciation may not have been accurate.
A loss will be reported as an expense in the Profit and Loss statement
Reported as a profit, under “Other Revenue” in Profit and Loss Statement
Recorded in sundries column in cash receipts journal
Carrying value/book valueLoss on disposal of assetProceeds from sale of assetProfit on disposal of assetSundry creditor
