what do you mean by asset disposal account - Accountancy - Depreciation Provisions and Reserves

Question

what do you mean by asset disposal account???????

Amit Chatterjee · Accepted Answer

Asset Disposal
Account is a subsidiary account that is opened at the time of sale
of an asset Although it is not compulsory to open this account but
this helps in the calculating profit or loss on the sale of the
asset The debit balancing figure (if Credit side > Debit side)
of this account indicates profit on sale of the asset, whereas, the
credit balancing figure (if Debit side > Credit side) of this
account indicates loss on sale of the asset The purpose of
preparing Asset Disposal Account is to provide complete and clear
view of all the transactions relating to the sale of the asset

Asset Disposal
Account can be prepared in both of the following methods

1 If Provision for
Depreciation Account is maintained
2 If Provision for
Depreciation Account is not
maintained

Â· When
Provision for Depreciation Account is maintained

Asset
Disposal Account

Dr

Cr

Date

Particulars

L
F

Amount

Rs

Date

Particulars

L
F

Amount

Rs

Machinery
A/c

Provision for
dep /

(Original
price plus expense incurred on purchase of asset)

Accumulated
dep A/c (Accumulated depreciation of asset being sold)

Profit and
Loss A/c (Profit on sale of asset, if any)

Bank/Cash/Debtors A/c (Sale price of Asset)

Profit and
loss A/c (Loss incurred on sale of Asset, if any)

Â· When
Provision for Depreciation is not
maintained

Asset
Disposal Account

Dr

Cr

Date

Particulars

L
F

Amount

Rs

Date

Particulars

L
F

Amount

Rs

Machinery
A/c

Bank/Cash/Debtors A/c

(Book value
of the asset at the beginning of the sale year of asset)

(Sale of
asset)

Profit and loss A/c

Profit and Loss
A/c

(Profit on
sale of asset, if any)

(Loss on sale
of asset, if any)

Asset Disposal Account
Dr.							Cr.
Date	Particulars	L.F.	Amount Rs	Date	Particulars	L.F.	Amount Rs
	Machinery A/c				Provision for dep./
	(Original price plus expense incurred on purchase of asset)				Accumulated dep. A/c (Accumulated depreciation of asset being sold)

	Profit and Loss A/c (Profit on sale of asset, if any)				Bank/Cash/Debtors A/c (Sale price of Asset)

					Profit and loss A/c (Loss incurred on sale of Asset, if any)

Asset Disposal Account
Dr.							Cr.
Date	Particulars	L.F.	Amount Rs	Date	Particulars	L.F.	Amount Rs
	Machinery A/c				Bank/Cash/Debtors A/c
	(Book value of the asset at the beginning of the sale year of asset)				(Sale of asset)
	Profit and loss A/c				Profit and Loss A/c
	(Profit on sale of asset, if any)				(Loss on sale of asset, if any)

Asset Disposal Account
Dr.							Cr.
Date	Particulars	L.F.	Amount Rs	Date	Particulars	L.F.	Amount Rs
	Machinery A/c				Provision for dep./
	(Original price plusexpense incurred on purchase of asset)				Accumulated dep. A/c (Accumulated depreciation of asset being sold)

	Profit and Loss A/c (Profit on sale of asset, if any)				Bank/Cash/Debtors A/c (Sale price of Asset)

					Profit and loss A/c (Loss incurred on sale of Asset, if any)

Asset Disposal Account
Dr.							Cr.
Date	Particulars	L.F.	Amount Rs	Date	Particulars	L.F.	Amount Rs
	Machinery A/c				Bank/Cash/Debtors A/c
	(Book value of the asset at the beginning of the sale year of asset)				(Sale of asset)
	Profit and loss A/c				Profit and Loss A/c
	(Profit on sale of asset, if any)				(Loss on sale of asset,if any)