Disposal Fixed asset


How should I input entry for Dispoal Fixed Asset on Income Statement and Balance sheet? I have bought with $960000 in 2014. I sold with $420000 in 2015.



The procedure is very simple, @zhaoqingqing, assuming you are using the Fixed Assets tab as described in the Guides beginning here: It takes much longer to write about than to perform.

Your periodic depreciation should have been entered according to instructions here: Depending on how much depreciation you have entered over time, some book value may remain.

When you dispose of the asset, follow the process here: This automatically transfers any remaining book value to Fixed assets - loss on disposal account. If the asset was fully depreciated, no value will transfer, of course.

If the asset is sold rather than abandoned or destroyed, regardless of how much book value remains, Receive Money in a cash or bank account. Allocate the transaction to Fixed assets (and the individual asset subaccount). This will record the receipt as a contra entry against original acquisition cost in the register for the specific asset you are disposing. Manager will automatically reduce its basis and adjust book value so the appropriate amounts are removed from the balance sheet. All this will show on the Fixed Asset Summary report.

You might also allocate the receipt directly to Fixed assets - loss on disposal, where it will appear as a contra entry. The net effect on both the balance sheet and profit and loss statement will be the same, but you lose the opportunity to record and track the transaction as being applicable to the specific asset.

Note two things:

  1. All entries are positive numbers when following the steps I have described. Manager takes care of any necessary negatives in both depreciation and disposal entries based on where they have been entered.

  2. My discussion assumes you have kept the Fixed assets - loss on disposal account under expenses, where it first appeared by default when you activated the Fixed Assets tab. Some may not like the idea of contra expense entries, but of course this is really no different than buying office supplies and returning some to the store.



Hi Tut, In relation to disposing of fixed assets, does it matter where to money from the sale goes eg. cash, personal bank account or does it need to into business bank account? [History: I bought a car new through finance almost 5yrs ago and reached the depreciation life of the vehicle and virtually paid it off].
Thanks for any help



Yes, it matters. If the business sells the car, you need to record a receipt, posted to the fixed asset. There can be no involvement of any personal account.



So the money needs to be deposited into my business bank account, yes? Then, I gather I can make a personal drawing from my business account, yes?



Yes to both questions.