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1. • CommentAuthortamarhaddadian
   • CommentTimeJul 12th 2007

    
   My corporate office passed the following posted entry for disposing of an asset. The asset was depreciated for one month, and due to water damage it was disposed the following month.
   
   Loss (Gain) Sale of fixed asse DR
   Accum Depr. - Disposal DR
   PC (fixed Asset)-Disposal CR
   
   My question is that now I have a depit balance sitting in the Accum Depr. - Disposal, which looks kind of odd. Please note that the Accum Depr.- disposal is a different account number than the original accum depr. account. My question is this entry correct? Is it common to use a seperate account for disposing assets. I understand it could be for tracking purposes, however it makes the balance sheet look odd.??
   
   Any Idea?
   
   Thanks,
2. • CommentAuthorabril
   • CommentTimeJul 12th 2007

    
   for disposal, use this entry
   
   first adjust your accumulated depreciation to its true amount (depreciation specifically for that asset)
   then you debit the cash or any consideration you get in selling the asset (dont use sales account)
   
   take a look on the carrying amount. is the cash you get is greater than the carrying value, then you have a gain on disposal
   
   if its lower, you have a lose on disposal
   
   if its a lose, entry would be
   
   dr.cash
   dr.acc.dep
   dr. lose on disposal
   cr.fixed asset
   
   for gain, entry would be
   
   dr.cash
   dr.acc. dep
   cr. gain on disposal
   cr. fixd asset