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Fixed Asset Disposal- Gain(Loss) on Sale Account
Hi There
I have the following scenario of asset disposal via a sale:
Asset original cost: $250,000
Accumulated depreciation: $12,361
Net Book Value: $237,639 (this being the $250k original cost less $12,361 accumulated depreciation till date)
The asset is sold for $240,000.
This means there should be a gain on sale of $240,000-$237,639= $2,361
The normal double entry book keeping entries I would expect are:
Dr Cash $240,000 (or receivables if sold on account)
Dr Accumulated depreciation $12,361 (to remove the asset from the balance sheet)
Cr Asset $250,000 (to remove the asset from the balance sheet)
Cr Gain on Sale $2,361 (other revenue account to recognise difference between cash received and the net book value of the asset).