Asset Accounting postings

Hi

The following would be the accounting entries

acquisition through PO route

Dr Asset

Cr Gr/IR

Scrapping

Dr Accumulated Dep

Cr Asset

Dr Loss on scrapping of asset ( configured in AO90)

Depreciation

Dr Depreciation (expenses account)

Cr Accumulated Depreciation (B/S recon account for asset)

Sale of asset with customer

Dr Customer

Dr Accumulated Dep

Cr Asset

Dr/Cr profit or loss on sale of asset

Regards

Sriram Balu

The above entries are correct, but for better understanding I have given the entries with the examples.

At the time of Purchase of Assets ( Not through the purchase order but through normal process)

Asset A/c $10,000

To Vendor A/c $10,000

Depreciation using (Accumulated Depreciation Method)

Depreciation A/c Dr $1,000

To Accumulated Depreciation A/c $1,000

Profit & Loss A/c Dr $1,000

To Depreciation A/c $1,000

Net Asset Value as on Balance Sheet Date

Acquisition Value $10,000

Less Depreciation ($1,000)

Net Asset Value $9,000

(WDV)

When u scrap the asset with out customer means without revenue i.e entire amount is loss (excluding Depreciation)

Accumulated Depreciation A/c Dr $1,000

Loss on Sale of Asset A/c Dr $9,000

Asset Value $10,000

When u sold the asset to the customer, then there are two situations

1. With Profit ( Assuming Asset has been sold at $11000)

Customer A/C Dr $11,000

Accumulated Depn A/c $ 1,000

To Asset Acccount $10,000

To Profit on Sale of Asset A/C $ 2,000

2. With Loss. Asset has been sold at $ 6000

Customer A/C Dr $6,000

Accumulated Depn A/cDr $1,000

Loss on Sale of Asset A/cDr $3,000

I hope this examples entries will clear your doubts. Please let me know if you still not convinced.