DEPRECIATION - DISPOSALS Week 2 – Session 2. Objectves Learning objectives: At the end of this...
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Transcript of DEPRECIATION - DISPOSALS Week 2 – Session 2. Objectves Learning objectives: At the end of this...
![Page 1: DEPRECIATION - DISPOSALS Week 2 – Session 2. Objectves Learning objectives: At the end of this chapter you will be able to: Account for the disposal of.](https://reader034.fdocuments.us/reader034/viewer/2022052607/5a4d1b5f7f8b9ab0599ac83e/html5/thumbnails/1.jpg)
DEPRECIATION - DISPOSALS
Week 2 – Session 2
![Page 2: DEPRECIATION - DISPOSALS Week 2 – Session 2. Objectves Learning objectives: At the end of this chapter you will be able to: Account for the disposal of.](https://reader034.fdocuments.us/reader034/viewer/2022052607/5a4d1b5f7f8b9ab0599ac83e/html5/thumbnails/2.jpg)
Objectves• Learning objectives:• At the end of this chapter you will be able to:• Account for the disposal of a non-current asset • Account for the part exchange of a non-current asset • Record entries for the acquisition and disposal in the non-
current asset register
![Page 3: DEPRECIATION - DISPOSALS Week 2 – Session 2. Objectves Learning objectives: At the end of this chapter you will be able to: Account for the disposal of.](https://reader034.fdocuments.us/reader034/viewer/2022052607/5a4d1b5f7f8b9ab0599ac83e/html5/thumbnails/3.jpg)
ProcessFirstly open a disposal T Account, then:Step 1 - Remove the original cost of the disposed asset from the asset account
Dr DisposalsCr Non-current asset cost
Step 2 - Remove the accumulated depreciation of the disposed asset from the accumulated depreciation account
Dr Non-current asset accumulated depreciationCr Disposals
Step 3 - Enter the sale proceeds received/receivable for the disposed asset
Dr Bank/Receivable Cr Disposals
Step 4: Balance off the ledger accounts and calculate whether a profit or loss has been made on disposal
![Page 4: DEPRECIATION - DISPOSALS Week 2 – Session 2. Objectves Learning objectives: At the end of this chapter you will be able to: Account for the disposal of.](https://reader034.fdocuments.us/reader034/viewer/2022052607/5a4d1b5f7f8b9ab0599ac83e/html5/thumbnails/4.jpg)
Disposals Account
Used to make the entries relating to the disposal of a non-current asset.
It has two purposes:
To remove the existing balances relating to the disposed asset.
To calculate whether a profit or a loss has been made on disposal.
![Page 5: DEPRECIATION - DISPOSALS Week 2 – Session 2. Objectves Learning objectives: At the end of this chapter you will be able to: Account for the disposal of.](https://reader034.fdocuments.us/reader034/viewer/2022052607/5a4d1b5f7f8b9ab0599ac83e/html5/thumbnails/5.jpg)
Example - VeronicaStep 1 - Remove the original cost of the disposed asset from the asset account
Dr DisposalsCr Non-current asset cost
![Page 6: DEPRECIATION - DISPOSALS Week 2 – Session 2. Objectves Learning objectives: At the end of this chapter you will be able to: Account for the disposal of.](https://reader034.fdocuments.us/reader034/viewer/2022052607/5a4d1b5f7f8b9ab0599ac83e/html5/thumbnails/6.jpg)
Example - VeronicaStep 1 - Remove the original cost of the disposed asset from the asset account
Dr DisposalsCr Non-current asset cost
Step 2 - Remove the accumulated depreciation of the disposed asset from the accumulated depreciation account
Dr Non-current asset accumulated depreciation Cr Disposals
![Page 7: DEPRECIATION - DISPOSALS Week 2 – Session 2. Objectves Learning objectives: At the end of this chapter you will be able to: Account for the disposal of.](https://reader034.fdocuments.us/reader034/viewer/2022052607/5a4d1b5f7f8b9ab0599ac83e/html5/thumbnails/7.jpg)
Example - VeronicaStep 1 - Remove the original cost of the disposed asset from the asset account
Dr DisposalsCr Non-current asset cost
Step 2 - Remove the accumulated depreciation of the disposed asset from the accumulated depreciation account
Dr Non-current asset accumulated depreciation Cr Disposals
Step 3 - Enter the sale proceeds received/receivable for the disposed asset
Dr Bank/Receivable Cr Disposals
![Page 8: DEPRECIATION - DISPOSALS Week 2 – Session 2. Objectves Learning objectives: At the end of this chapter you will be able to: Account for the disposal of.](https://reader034.fdocuments.us/reader034/viewer/2022052607/5a4d1b5f7f8b9ab0599ac83e/html5/thumbnails/8.jpg)
Example - VeronicaStep 1 - Remove the original cost of the disposed asset from the asset account
Dr DisposalsCr Non-current asset cost
Step 2 - Remove the accumulated depreciation of the disposed asset from the accumulated depreciation account
Dr Non-current asset accumulated depreciation Cr Disposals
Step 3 - Enter the sale proceeds received/receivable for the disposed asset
Dr Bank/Receivable Cr Disposals
Step 4 - Balance off the Disposals ledger account to calculate whether a profit or loss has been made on disposal
![Page 9: DEPRECIATION - DISPOSALS Week 2 – Session 2. Objectves Learning objectives: At the end of this chapter you will be able to: Account for the disposal of.](https://reader034.fdocuments.us/reader034/viewer/2022052607/5a4d1b5f7f8b9ab0599ac83e/html5/thumbnails/9.jpg)
Question 1 – Jeremys Jingles
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Question 1 – Jeremys Jingles
Date Cost Dep Charge Accm DepnCarrying Amount Disposal P/L
01/01/2006 1100031/12/2006 3300 3300 770031/12/2007 2310 5610 539031/12/2007 5000 -390
01/01/2006 11000 Disposal 11000 Disposal 5610 31/12/2007 5610
11000 MV @ Cost Accm Depn 5610 5000 DisposalBank 5000Loss on Disposal 390
11000 11000
MV @ Cost Accm Depn
Disposal Bank
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Question 2 – Marys CakesExtension questions 3-15
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Question 2 – Marys CakesDate Cost Dep Charge Accm Depn
Carrying Amount Disposal P/L
MV @ Cost Accm Depn
Disposals Bank
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Date Cost Dep Charge Accm DepnCarrying Amount Disposal P/L
01/01/2004 220031/12/2004 880 880 132031/12/2005 528 1408 792 200 -592
01/01/2004 2200 Disposal 2200 Disposal 1408 31/12/2005 1408
Computer @ Cost 2200 Accm Depn 1408 200 DisposalBank 200Loss on Disposal 592
2200 2200
Computer @ Cost Accm Depn
Disposal Bank
Question 2 – Marys Cakes