Gain on Disposal of Assets

When a fixed asset is sold for more than its written-down value, the excess is a gain and is credited here. In BRAccount the sale is made with a Sales Invoice that references the Asset record: the invoice removes the cost from the asset ledger, reverses the Accumulated Depreciation booked so far, debits the buyer or the bank, and posts the difference to this account, or to a loss account if the price is lower. The Asset status then changes to Sold and its depreciation schedule stops. The gain is taxable, and a VAT-registered company must charge 13 percent VAT on the sale price. Selling through a plain Journal Entry leaves the Asset record alive and depreciation still running.

Gain = Sale price excluding VAT - (Original cost - Accumulated depreciation)

1. 01Go to Assets > Asset, open the asset, and confirm depreciation is posted up to the sale date.
2. 02Click Sell Asset, or go to Invoicing > Sales Invoice > New and pick the asset in the item row.
3. 03Enter the buyer, the sale price and the VAT template.
4. 04Submit. The entry below posts, the asset status becomes Sold and the schedule stops.
5. 05Record the receipt with Create > Payment Entry from the invoice.
6. 06Report the gain in the annual return's asset disposal schedule.

Posted automatically when you scrap or sell an Asset record for more than its written-down value, via the disposal Journal Entry.

Dr Bank Account Rs 45,000, Dr Accumulated Depreciation Rs 2,471, Cr Furniture and Fixtures Rs 40,000, Cr Gain on Disposal of Assets Rs 7,471 selling the chairs.