Disposal of Fixed assets

nodan

A question on the postings required when a fixed asset is disposed of.
The asset was acquired via a HP agreement. The original postings made were:
Dr Fixed assets
Cr HP Loan A/C.

Depreciation was charged each year and following entries made:
Dr Dep charge for year a/c
Cr Accumulated Dep a/c

HP payments made through out the agreement were posted as follows:
Dr HP Loan A/C (Capital portion of repayment)
Dr HP Finance charges a/c
Cr Bank.

Think all are correct but am struggling with the entries for a disposal.

Kinetic^

Disposal is as follows:

Credit fixed asset a/c (bs) with cost of asset
Dr Disposal a/c (P&L) with cost of asset

Debit Bank a/c (bs) with proceeds if there is any
Credit Disposal a/c (P&L) with proceeds if there is any

Debit asset depreciation a/c (bs) with accumulated dep on the asset
Credit Disposal a/c (P&L) with accumulated dep on the asset

The above journals will take the asset out of your balance sheet and into the profit & loss account. If you're left with a debit in the disposal a/c then you've made a loss on the sale of asset or a credit you've made a gain.

If you've anymore questions, let me know.

LoneGunM@n

Don't forget the VAT part of the transactions, if you are VAT registered!

nodan

Any ideas when an asset is traded in and its a lease agreement. We have received a vat schedule from the lease company with the trade in value on the schedule.

Not sure of the postings.