Accounting


Accounting Forum

AccountingCoach.com is the world's largest free online accounting course.


Not signed in (Sign In)

Categories

Vanilla 1.1.7 is a product of Lussumo. More Information: Documentation, Community Support.

Welcome Guest!
Want to take part in these discussions? If you have an account, sign in now.
If you don't have an account, apply for one now.

General Accounting Discussions: Fixed Asset Double Entry

Bottom of Page

1 to 5 of 5

  1.  
    • CommentAuthortgm603
    • CommentTimeSep 15th 2009 edited
     
    ABC ( A Proprietorship) already ceased business officially in July , 2008
    XYZ ( a Private Limited company )is still active

    ABC ( proprietorship ) has a Fixed Asset - a Car and the detail is as below .

    --- This car has in January,2008 go for refinance for a sum of $35,000 and transfer to another company --- XYZ ( a private limited,one of the Director is the Proprietor ) . Please let me know what is the double entry for treating the NBV .

    Amount as at 31 /12/2007 :
    --- Cost = $78,721 Accumulated Depreciation= $43,396 Net Book Value (NBV) = $35,325

    as ABC already ceased business officially in July , 2008 , so, the accounts will write up to July, 2008. And as at July, 2008 ,the following double entry was taken up .

    DR Accumulated Depreciation Account at $43,396
    CR Fixed Asset - Car Account at $43,396
    ( Being fixed asset transfer to XYZ and accumulated depreciation thereof transfer to fixed asset account )

    DR ( Please help me which account shall I DEBIT this NBV of $35,325 ? )
    CR Fixed Asset - Car Account at $35,325
    ( Being fixed asset transfer to XYZ and NBV thereof transfer to ????? )

    -------------------------------------------------------------------------------------------------------------------------------------------
    As for the refinanced amount of $35,000 ( this amt will be transfer to XYZ ) but before that this amount was paid to ABC ( proprietorship ) from the bank ( which granted the refinance amount of $35,000). When receiving this $35,000 issued under ABC (proprietorship) , the double-entry is DR Bank but I do not know which account to CR this sum.

    At a later date, ABC (proprietorship) issue out this $35,000 to XYZ ( a private limited co. ) and the double entry is :

    DR XYZ at $35,000
    CR Bank at $35,000

    PLEASE ..... HELP !!!
    Thankful People: spd009
    • CommentAuthorzaqperez
    • CommentTimeSep 17th 2009
     
    I think that there are four separate issues here that need to be addressed individually:
    1) ABC refinances the loan on the asset
    2) ABC transfer the debt to XYZ in consideration of the asset
    3) ABC disposes of the asset
    4) XYZ receives the asset and its corresponding debt

    Assuming no proceeds were received, I think the following should solve your problem:

    Books per ABC
    DR – Loans Payable (old loan) $35,325
    CR – Gain on refinance of debt $325
    CR – Loans Payable (new loan) $35,000
    To record the refinance of a loan and its resulting gain

    DR – Loans Payable (new loan) $35,000
    CR – Gain on transfer of loan $35,000
    To record the transfer of loan to XYZ

    DR – Acc. Dep. 43,396
    DR – Loss on disposal $35,325
    CR – Fixed Asset $78,721
    To record the disposal of an asset to XYZ

    Books per XYZ
    DR - Fixed Asset $35,000
    CR – Loans Payable $35,000
    To record the acquisition of a fixed asset and its corresponding liability from ABC

    Good luck
    Thankful People: tgm603
    • CommentAuthortgm603
    • CommentTimeSep 19th 2009 edited
     
    hi zaqparez,

    thanks so much for your detailed explanation.

    I forgotten to mention in my question that the Car was just transfer to XYZ and treated as Fixed Asset of XYZ but this transfer DOES NOT involve money, it is solely a transfer of the car from a proprietorship ABC to the inter-company ,XYZ ( a private limited company ) . In this case , is the double entries of your answer still useable ?

    Sorry for the inconvenience due to inaccurate information.
  4.  
    Its a very good post and i must say that its a great work!
  5.  
    Good work Tg and very nicely done! I agree with your points!

1 to 5 of 5

  1.  



 

Why AccountingCoach.com?

the accounting coach

AccountingCoach.com is designed to help people without an accounting background easily understand accounting concepts at no cost.


By investing thousands of hours, we have created clear and concise accounting information for both business people and students of all ages.


We understand how difficult accounting can be. That's why we have ensured that each accounting topic includes a clear explanation, reinforcing drills, Q&A, puzzles, dictionary of terms, etc.


Read 1,402 Visitor Testimonials



What's on AccountingCoach.com?