Page 117 - F3 -FA Integrated Workbook STUDENT 2018-19

Non-current assets: disposal and revaluation

Example 1

Calculation of profit or loss on disposal

On 30 June 20X4, Platinum disposed of a machine and received cash
proceeds of $7,000. The original cost of the machine was $70,000, and at the
date of disposal the accumulated depreciation balance was $65,000.

Required:

Show the accounting entries required to account for the asset disposal
and prepare the asset disposal account.

Solution

Debit $ Credit $
Asset disposal 70,000 Machine asset 70,000

Accumulated dep’n 65,000 Asset disposal 65,000
Cash 7,000 Asset disposal 7,000

Asset disposal 2,000 Profit or loss 2,000

Asset disposal
Date Details $ Date Details $

30..06.X4 Machine asset 70,000 30.06.X4 Acc Dep’n 65,000
30.06.X4 Profit or loss ß 2,000 30.06.X4 Cash 7,000

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72,000 72,000

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Illustrations and further practice

Now try TYU 1 from Chapter 8 of the Study Text

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