Assume that the disposal sale transaction occurred in a company that decided to sell a car, which is a fixed asset. This transaction of selling a fixed asset occurred through the free text invoice in accounts receivable. The posting profile of a disposal sale considers the following:
- Depreciation (prior years): The total depreciation of prior years will be reversed; the ledger account is the accumulated depreciation account, and the offset account is the fixed assets gain/loss account
- Depreciation (this year): The total depreciation of the current year will be reversed; the ledger account is the accumulated depreciation account, and the offset account is the fixed assets gain/loss account
- Acquisition value: The acquisition value will be reversed; the ledger account is the fixed assets account, and the offset account is the fixed assets gain/loss account
- Net book value: The ledger account is the fixed assets gain/loss account, and the offset account is also the fixed assets gain/loss account
In order to set up a fixed assets posting profile, go to Fixed assets | Setup | Fixed assets posting profile and select Disposal | Sale, as shown in the following screenshot:
The generated entry will be as follows:
- Dr. Accumulated depreciation account
- Dr. Fixed assets gain/loss account
- Dr. Accounts receivable
- Cr. Fixed assets gain/loss account
- Cr. Fixed assets gain/loss account
- Cr. Fixed assets account