Disposal Of Non Current Assets

Question 1

Disposal of Non current assets

Answer 1

Proceeds - NBV = profit/ loss

Profit/ loss is transferred to the profit and loss account

It is calculated in a disposal account

Question 2

Method

Answer 2

1) transfer the asset from the asset account to disposals account :
Dr disposals
Cr asset account

2) transfer the depreciation on the asset from the accumulated depreciation account to the disposals account

Dr accumulated dep
Cr disposals

3) entre the sales proceeds in the disposals account and calculate the profit/ loss

Question 3

Profit or loss ?

Answer 3

If proceeds is bigger than (cost - depreciation) (NBV) then there’s a profit vive versa