The document outlines the steps to account for the disposal of assets, including transferring the asset's historical cost and accumulated depreciation to a disposal account, recording any proceeds or trade-in allowances, and then closing the disposal account to either a profit or loss on disposal account. It also details similar steps for trading in assets, including recording the purchase of a new asset through a sundry creditor account.

1. 17.10
SUMMARY OF DISPOSAL
PROCEDURES

2. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
17.10 SUMMARY OF DISPOSAL PROCEDURES
Step 1: Transfer the historical cost of the asset to
the Disposal of Asset account
Step 2: Transfer the Accumulated Depreciation of
the asset to the Disposal of Asset account
Step 3: Record the proceeds of the sale of the
asset in the Disposal of Asset account
Step 4: Close off the Disposal of Asset account to:
• Profit on Disposal of Equipment account OR
• Loss on Disposal of Equipment account
Sale of Non-Current Assets
Step 1: Transfer the historical cost of the asset to
the Disposal of Asset account
Step 2: Transfer the Accumulated Depreciation of
the asset to the Disposal of Asset account
Step 3: Record the trade-in allowance given for the
old asset in the Disposal of Asset account by
creating a Sundry Creditor
Step 4: Close off the Disposal of Asset account to:
• Profit on Disposal of Equipment account OR
• Loss on Disposal of Equipment account
Trading-in of Non-Current Assets
Step 5: Record the purchase of the new asset in
the Sundry Creditor account

3. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
TASK
In-class Homework
Ex17.8 X
Case study X