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Open a sundry creditor account (separate to trade creditor) Disposal of Non current Asset.

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Presentation on theme: "Open a sundry creditor account (separate to trade creditor) Disposal of Non current Asset."— Presentation transcript:

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2 Open a sundry creditor account (separate to trade creditor) Disposal of Non current Asset

3 Not a stock item Requires general journal entry

4 General Journal DateDetailsGeneral Ledger Subsidiary Ledger DebitCreditDebitCredit Vehicle35000 gst3500 Creditor - Best Cars Purchase of a vehicle on credit Inv The General Journal Entries Buying a Car on Credit

5 Disposal of Non-current Assets Associated concepts Historical Cost Depreciation Accumulated Depreciation

6 Asset may be scrapped Sold for cash Traded in on a replacement asset It needs to be removed from the firms books

7 Example of a Disposal of Asset Ledger

8 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.

9 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

10 Reported as a profit, under Other Revenue in Profit and Loss Statement Recorded in sundries column in cash receipts journal

11 Transfer of historical cost is the same as under sale of non-current assets Accumulated depreciation is transferred the same way Trade in allowance is a debit entry in Sundry Creditors account Loss on sale is the same Final general journal entry records the purchase of the new non-current asset

12 Carrying value/book value Loss on disposal of asset Proceeds from sale of asset Profit on disposal of asset Sundry creditor


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