About full asset disposals—Fixed Assets Management
Fully dispose of an asset when your organization no longer has possession of it or it’s removed from service. Only assets that are in service can be disposed of.
Types of asset disposals
Fixed Assets Management supports the following disposal types:
-
Sale: You receive a payment in exchange for the asset or portion of the asset.
-
Casualty loss: The asset or a portion of the asset is destroyed or damaged due to an unforeseen event or accident. No payment is received.
-
Theft: The asset or portion of the asset is stolen. No payment is received.
-
Other: The asset is disposed of for any other reason. For example, it might still be in your possession, but it has reached the end of its useful life or has no resale value. No payment is received.
What happens after disposal
Fully disposing of an asset does the following:
-
Changes the asset's state to Disposed.
-
Calculates the gain or loss amounts and creates disposal journal entries.
-
Records the disposal on the asset's disposal tab and on each depreciation schedule.
-
Changes the state of Not posted depreciation entries to Canceled.
Disposal of assets under the Daily depreciation method
For assets depreciating under the Daily method, there are additional changes that occur after disposal. The depreciation schedule updates to account for the partial depreciation in the month of disposal. A new entry is added to the depreciation schedule and depreciation expense journal entry is created for that entry.
For example, an asset that's disposed on October 10th has 10 days of accumulated depreciation for the month of October. The depreciation schedule updates with an additional entry on October 10th for this partial depreciation. The original entry for October is adjusted to reflect the correct remaining depreciation amount for October, which was canceled.
|
Period |
Scheduled posting date | Actual posting date |
Depreciation amount ($) |
State |
|---|---|---|---|---|
| 1 | September 30th | September 30th | 123.28 | Posted |
| 2 | October 10th | October 10th | 41.09 | Posted |
| 2 | October 31st | -- | 86.30 | Canceled |
| 3 | November 30th | -- | 123.28 | Canceled |
| 4 | December 31st | -- | 127.40 | Canceled |
About disposal journal entries
You can view the gain or loss amount and disposal journal entry in the Disposal Details section of the depreciation schedules. For non-depreciable assets, this information appears on the Disposals tab of the asset.
The journal entry for a disposal also contain the following information:
-
Dimensions: All dimensions copied over from the asset.
-
Posting date: The disposal date of the asset.
-
Memo: The Description field of the asset.
-
Description: "Disposal for ID--Name", where "ID--Name" is replaced with the ID and name of the asset.
Journal entry examples
Scenario:
-
Asset cost: $16,000.00
-
Total accumulated depreciation: $13,000.00
-
Remaining depreciation: $3,000.00
-
Sales price: $7,000.00
|
GL account |
Debit ($) |
Credit ($) |
|---|---|---|
| Disposal | 7,000.00 | |
| Asset | 16,000.00 | |
| Accumulated depreciation | 13,000.00 | |
| Gain or loss | 4,000.00 |
Scenario:
-
Asset cost: $16,000.00
-
Total accumulated depreciation: $13,000.00
-
Remaining depreciation: $3,000.00
-
Sales price: $2,500.00
|
GL account |
Debit ($) |
Credit ($) |
|---|---|---|
| Disposal | 2,500.00 | |
| Asset | 16,000.00 | |
| Accumulated depreciation | 13,000.00 | |
| Gain or loss | (500.00) |
Scenario:
-
Asset cost: $16,000.00
-
Total accumulated depreciation: $13,000.00
-
Remaining depreciation: $3,000.00
-
Sales price: $3,000.00
|
GL account |
Debit ($) |
Credit ($) |
|---|---|---|
| Disposal | 3,000.00 | |
| Asset | 16,000.00 | |
| Accumulated depreciation | 13,000.00 |
Scenario:
-
Asset cost: $16,000.00
-
Total accumulated depreciation: $13,000.00
-
Remaining depreciation: $3,000.00
-
Sales price: $0.00
|
GL account |
Debit ($) |
Credit ($) |
|---|---|---|
| Asset | 16,000.00 | |
| Accumulated depreciation | 13,000.00 | |
| Gain or loss | (3,000.00) |
Revert a full disposal
If you fully dispose of an asset by mistake, you can revert the full disposal.
Reverting a full disposal does the following:
-
Deletes the related full disposal journal entries.
-
Removes the full disposal record from the asset's Disposals tab and each depreciation schedule.
-
Changes the state of Canceled depreciation entries to Not posted.
-
Changes the asset's state to In service.
