How do you dispose of an asset with a journal entry?

Answer 1

You need to close off all accounts relating to the fixed asset being disposed to a gain or loss on disposal of fixed asset a/c. Assume cost of a truck was $40k. Its estimated useful life was 4 yrs with no salvage value so each yr's depn was $10k. After 3 yrs you decided to upgrade to a bigger truck. Before adjustment, your cost a/c had a DR bal of $40k, and your accumulated depreciation a/c had a CR bal of $30k, your nbv was $10k. You sold it for $12k. Your journal entries are:
Dr Cash 12k (proceeds from sale)
Dr Accd depn 30k (to close off the a/c)
Cr Motor vehicle at cost 40k (to close off the a/c)
Cr Gain on disposal of motor vehicle 2k (to recognise gain)

Let's assume the same thing but this time you sold it for $8k. Your journal entries would be:
Dr Cash 8k (proceeds from sale)
Dr Loss on disposal of motor vehicle 2k (to recognise loss)
Dr Accd depn 30k (to close off the a/c)
Cr Motor vehicle at cost 40k (to close off the a/c)

Let's assume the same thing again but this time you wrecked the truck and you didn't get a cent for it (let's ignore insurance for this e.g.), your entries would be:
Dr Motor vehicle written off 10k (expense item)
Dr Accd depn 30k (to close off the a/c)
Cr Motor vehicle at cost 40k (to close off the a/c)

Answer 2

Disposal Of Assets Journal Entry

Answer 3

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RE:
How do you dispose of an asset with a journal entry?

Answer 4

you don't say the reason for the disposal of the asset. Was it sold? Written off, etc. Anyway the journal entry would have Sales, Write offs etc with your amount in the debit column, then your asset listed, with the amount in the credit column. Any left over depreciation on the asset would also be written off at that time. eg

Sales ..........60
Asset .................60

Answer 5

If it was fully depreciated, it should have no value as an asset and thus no entry is needed.