How to record the sale of a fixed asset in your chart of accounts

anitaganzer

Hi,

Recently sold a fixed asset listed in my chart of accounts. Sold for less than price paid so how do I go about recording the sale and then clearing out the asset to zero? E.g. Asset value $50,000, sold for $45,000, balance of $5,000 (is this a write-off?). Thanks in advance!

Acctd4

The difference between an asset's cost & its sale price will either be a gain (which would need to be declared as income) or a loss. Depending on when you purchased it, there may also be depreciation over its effective life to factor in.

I'd suggest looking at the tax return for the FY in which you purchased it in order to determine if it was fully expensed (eg the full net cost was claimed at the time) or being depreciated. Depending on the nature of the trading entity & the asset holding, the loss may need to be carried forward until it can be applied to a future capital gain.

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Acctd4

@Zappy Might have known you'd have something to say 😂....

Firstly, BAS Agents are unable to charge a fee for tax agent services, however ANYONE can give free advice/info. (In this case, the info being requested isn't actually tax advice anyway, it's simply how to process the bookkeeping for it!)

Secondly, I've been a senior tax consultant for nearly 2 decades so happen to have the knowledge & experience to be able to explain what's involved 🙄

Thirdly, you start by saying as bookkeepers, we shouldn't answer, then proceed to respond/clarify anyway !?! 😆

As I had already explained, the relevant FY's tax return/financials would need to be checked to determine if it was indeed depreciated. The cost threshold has changed multiple times in recent years & the structure of a business may also affect capital expensing eligibility. You can't provide a journal without this information as you would need to know the applicable accounts & written down value (as per the tax agent).

anitaganzer

The said asset was an instant asset write-off. Actually just chasing a couple of journal entries is all. That's okay though, I'll see if I can get help elsewhere. Thanks anyway.

Acctd4

In that case, there wouldn't be a loss as it was claimed at its full value, meaning it's not a capital asset for tax purposes. Therefore, it either should have been journaled out at 100% depreciation (via a GJ) in the FY it was purchased OR entered via a normal Expense account at that time.

RA/RAH have a Fixed Asset List feature but unfortunately, it doesn't really do anything. Therefore, I would recommend entering a Sales Receipt using this Asset Item to record the sale against the value. Unfortunately, there's no option to reduce an Asset AND record income received at the same time so you'll then need to enter a GJ for the sale, to post to the actual income account. NB: Don't forget to include any relevant tax code on this GJ as this is the transaction that will reflect in your BAS for the funds received!

Check the balance for this Asset in your CoA/Bal Sheet & - either on the same GJ or on a 2nd one - enter lines posting to, debit the Asset account & credit a relevant respective Expense account. Note do NOT use tax codes on GJ as this is simply moving values.

cosmic

Speak to your tax agent pls

If you can't get help. Then we can help . Firm of Chartered Accountants and Tax Agent

We can't give advice on this public forum.

Call me If you want to discuss any

further

Chandra

0407068942

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cosmic

Kevin are you a Tax Agent?

I Dont give advice on Tax on this open forum .

That's unethical for my practice nor should any one else unless you are a appointed tax agent of the taxpayer.

I will give my service to any one in this forum not in this open forum.

Thanks

Chandra

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Acctd4

”For pity’s sake Kevin”, I’M NOT GIVING TAX ADVICE, it’s simply the bookkeeping for it!!!” 😂😂😂

Please read my previous explanation - I’m trying to help someone who has asked how to enter transactions - transactions for which the “tax” side has already been DONE by the tax agent!