Acquisition of Used Assets

1

Please guide us how one can add used assets with its original cost, accumulated depreciation and goodwill, if any.

2

Goodwill by definition isn’t attributable to any single asset. Goodwill only applies for business combinations and it’s the excess of total acquisition price less the net value of all identifiable assets and liabilities.

That out of the way, for a used asset, if the asset was traded for exactly its Net Book Value, you should use that as the cost and estimate a remaining useful life.

If you still insist on showing the breakdown of cost and depreciation as on purchase date, you will have to create a clearing account and do the following:

  1. Purchase invoice with the net value to the clearing account.
  2. Create the asset and post a journal entry from the clearing account to the asset account at full value.
  3. Create a depreciation entry which will post all opening depreciation.
  4. Create a journal entry to Cr. depreciation expense against the remaining Dr. balance in the clearing account.

It’s not worth the headache if you ask me.

3

Indeed.

I also feel compelled to add, @Rajwani, that unless your local jurisdiction requires you to do so, major accounting standards do not allow for you to acquire accumulated depreciation.

You record the asset at the cost you paid for it; a previous owners’ historical cost and depreciation method are not taken into account.

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4

  1. Was the asset purchased new by you and prior depreciation recorded outside of Manager or

  2. Was the asset purchased second hand by you.

  3. If purchased second hand were individual items value listed or just a total for many items

  4. Do you have reason to suspect the listed value was not a true market value (included cost from another item)

5

@Ealfardan @p4unger @Patch Thank you for your inputs.

We have discussed the same within the team too and are considering one of the option.

@Patch Our case is the combination of point 1 and 3.

6

For 1. Purchased new with prior depreciation outside of Manager

  • entered new value you originally purchased asset for
  • use a starting value for depreciation

For 3. Purchased second hand with a total not individual listing of each item.

  • that is an accounting question not an accounting software question.
  • the required procedure will depend on exactly what the assets are and local laws.