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ACCOUNTING-ASSET DISPOSAL

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Nomfanelo Ngubane
Nomfanelo Ngubane

These slides are a brief summary of how to deal with transactions that affect the disposal of fixed assets

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DISPOSAL OF FIXED ASSETS
HAVE YOU EVER WONDERED WHAT BUSINESSES DO WITH THOSE FIXED ASSETS THEY NO LONGER NEED ???
WELL THEY DO THAT THROUGH WHAT WE CALL ASSET DISPOSAL/THE DISPOSAL OF FIXED ASSETS
REASONS BEHIND DISPOSING FIXED ASSETS: The asset may be old and there is a newer model in the market The business may be in need of cash Can you think of other reasons as well???
WAYS OF DISPOSING ASSETS Cash sale Trade-in Credit sale
HOW DO WE TREAT AN ASSET DISPOSAL TRANSACTION? WELL, WE SUGGEST YOU FOLLOW THE 4 SIMPLE STEPS IN THE FOLLOWING SLIDE
1. Close the Asset Account to the Asset Disposal Account 2. Close the Accumulated Depreciation Account of the Asset to the Asset Disposal Account 3. Record the Sales Price (or Trade-In value) of the Asset 4. Determine the Profit/Loss made on the sale or trade-in of the Asset
ACCOUNTING-ASSET DISPOSAL

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ACCOUNTING-ASSET DISPOSAL

  • 2. HAVE YOU EVER WONDERED WHAT BUSINESSES DO WITH THOSE FIXED ASSETS THEY NO LONGER NEED ???
  • 3. WELL THEY DO THAT THROUGH WHAT WE CALL ASSET DISPOSAL/THE DISPOSAL OF FIXED ASSETS
  • 4. REASONS BEHIND DISPOSING FIXED ASSETS: The asset may be old and there is a newer model in the market The business may be in need of cash Can you think of other reasons as well???
  • 5. WAYS OF DISPOSING ASSETS Cash sale Trade-in Credit sale
  • 6. HOW DO WE TREAT AN ASSET DISPOSAL TRANSACTION? WELL, WE SUGGEST YOU FOLLOW THE 4 SIMPLE STEPS IN THE FOLLOWING SLIDE
  • 7. 1. Close the Asset Account to the Asset Disposal Account 2. Close the Accumulated Depreciation Account of the Asset to the Asset Disposal Account 3. Record the Sales Price (or Trade-In value) of the Asset 4. Determine the Profit/Loss made on the sale or trade-in of the Asset