What is the purpose of Clearing and Revenue account in Asset Disposal : F-92?

[Former Member]

Hi All,

Please clarify my doubt ;

In Asset Disposal - Sale to Customer : F-92 with customer

Suppose an asset with historical cost $1000 and accumulated depreciation of $100 is being sold to a customer at $1100, the posting entries will be as follows :

Dr     Customer Account (A/R)                    1,100

Dr     Accumulated Depreciation                    100

Cr     Fixed Asset - Acquisition Cost           1,000-

Cr     Gain/Loss of Fixed Asset Disposal       200-

Dr     Clearing Account for Asset Disposal   1,100

Cr     Revenue for Asset Disposal                1,100-

I completely understand the first four line items, but don't know the purpose or the 5th and 6th line items.

Please explain why we need a clearing and revenue account for asset disposal and what would be the impact of these accounts in asset accounting?

Thanks in advance !!!

Regards,

Vicki

[Former Member]

Hi,

In F-92 if you select the posting key 50, then 6 line items are posted in the system which are mentioned as above. Whereas if you select posting key 75, then you have to enter the Asset details and then only 4 line items will be posted as above which you are able to understand. The 2 clearing line items are just for the offsetting purpose. In both line items the GL's are same.

Regards,

Malhar. 

[Former Member]

Thank you Malhar !

But I would like to know what is the purpose of these two offsetting entries? and why are they having the same GL accounts?

a debit and credit knocking off each other, what purpose does it serve?

Thanks in advance !

Regards,

Vicki

[ajaycwa1981]

Hi Vicki

This is just a technical account, which gets Dr and Cr in the same document

The purpose is just to tell you how much asset sale has happened during the year.. You can get this info by looking at the GL Account

Since Asset Module is a sub ledger, the asset needs to be retired. At the same time, the FI-GL also should show the needed info from accounting perspective

While the required GL entry is completed with the 1st 4 line items, the 5th and 6th are just the statistical ones

Br. Ajay M