1 / 11

Buying and Selling non-current assets

Buying and Selling non-current assets. Two new ledgers. Open a sundry creditor account (separate to trade creditor) Disposal of Non current Asset. Sale of non-current asset. Not a stock item Requires general journal entry. The General Journal. The General Journal Entries.

Télécharger la présentation

Buying and Selling non-current assets

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Buying and Selling non-current assets

  2. Two new ledgers • Open a sundry creditor account (separate to trade creditor) • Disposal of Non current Asset

  3. Sale of non-current asset • Not a stock item • Requires general journal entry

  4. The General Journal The General Journal Entries Buying a Car on Credit

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

  6. The end of non-current asset life • Asset may be scrapped • Sold for cash • Traded in on a replacement asset It needs to be removed from the firm’s books

  7. New account – Disposal of NC ASSet Example of a Disposal of Asset Ledger

  8. Disposal of Asset Account • 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. Why sell a non-current asset for less than its value? • 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. Profit on Sale of Non-current asset • Reported as a profit, under “Other Revenue” in Profit and Loss Statement • Recorded in sundries column in cash receipts journal

  11. Learn the following terminology • Carrying value/book value • Loss on disposal of asset • Proceeds from sale of asset • Profit on disposal of asset • Sundry creditor

More Related