How do I deal with fixed asset disposals?
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Summary
Disposals of Fixed Assets can be entered into the accounts using Journal Entries, or you can use " Sales Ledger Invoice/Credit Note" if you want to produce an invoice for the disposal.
More Information
You will need to check you have all the required Nominal Centres set up in Platinum e.g. Disposals, Depreciation and Fixed Assets. You may need to seek advice from your accountant as to which centres to use and whether they should be treated as Profit & Loss or Balance Sheet Items. To create new nominal centres follow this article.
As a rule of thumb, you will need to remove the Cost and Depreciation of the Fixed Asset from your Balance Sheet, and post these to a Balance Sheet Disposals of Fixed Assets nominal centre. The value that you get for the Disposal of the Fixed Asset should be posted into this code as one side of the entry either via a journal entry or sales invoice. The Profit or Loss on disposal should then be posted via a journal to a Profit & Loss code for Profit/Loss on Disposals. This may be a Sales/Cost of Sales centre although you may wish to seek advice from your accountant.
Suggested Postings
- Journal the value of the asset to Credit the Fixed Asset Cost nominal centre and Debit the Fixed Asset Disposal nominal centre.
- Journal any depreciation to Credit the Fixed Asset Disposal nominal centre and Debit the relevant Fixed Asset Depreciation nominal centres (you may have used both the Current and Accumulated Depreciation centres).
- Raise a sales invoice for the sale of the asset. Your sales centre should link to the Fixed Asset Disposals centre. Alternatively post a journal for the sale, making sure you post any VAT element of the sale correctly.
- Journal the remaining balance in the Fixed Asset Disposal centre to the Profit & Loss. This will be a Credit to the P&L if you made a profit or a Debit to the P&L if you made a loss on the sale of the asset. You may need to create a Profit & Loss nominal centre for Profit/Loss on Disposals.
See also
- Posting journals
- What is a nominal code?
- How do I create a nominal code?
- How do I create a sales or purchase centre?
- How do I produce a text invoice in Platinum?
