 Why might we sell a non-current
asset?
 Not a stock item. Why?
 Requires general journal entry

 Sundry Creditors
 Disposal of Assets

The General Journal Entries
General Journal
Subsidi
General ary
Date Details Ledger Ledger
Debit Credit Debit Credit
Vehicle 35000
gst 3500
Creditor - Best
Cars 38500

Disposal of Non-current Assets
Associated concepts
 Historical Cost
 Depreciation
 Accumulated Depreciation

 Asset may be scrapped
 Sold for cash
 Traded in on a replacement asset
It needs to be removed from the firm’s books

 Transfer assets’ historical cost to the Disposal
of Asset account
 Transfer accumulated depreciation to
Disposal of Asset account
 Show amount received from sale of asset in
Disposal account
 Close the Disposal of Asset account to the
Profit or Loss on sale of the asset.

 Item is not popular therefore little demand
 May be obsolete technologically (eg
computer)
 It may be damaged or severely marked
The accumulated depreciation may not have
been accurate.
A loss will be reported as an expense in the
Profit and Loss statement

 Reported as a profit, under “Other Revenue”
in Profit and Loss Statement
 Recorded in sundries column in cash receipts
journal

 Transfer of historical cost is the same as
under sale of non-current assets
 Accumulated depreciation is transferred the
same way
 Trade in allowance is a debit entry in Sundry
Creditors account
 Loss on sale is the same
 Final general journal entry records the
purchase of the new non-current asset

 Carrying value/book value
 Loss on disposal of asset
 Proceeds from sale of asset
 Profit on disposal of asset
 Sundry creditor