Full disposal examples—Fixed Assets Management

Use these examples to understand how Fixed Assets Management calculates gains and losses for full disposals and generates the resulting disposal journal entries. Examples are provided for both depreciable and nondepreciable assets.

The following examples assume separate Disposal and Gain or loss General Ledger accounts.

If the Disposal and Gain or loss accounts are the same General Ledger account, the disposal journal entry contains a single line for that account.

Formulas

  • Net book value = Asset cost − Accumulated depreciation

  • Gain or loss amount for full disposal (depreciable asset) = Sales price − Net book value

  • Gain or loss amount for full disposal (nondepreciable asset) = Sales price − Asset cost

These formulas and examples assume the asset has not had any prior partial disposals. For examples of a full disposal after one or more partial disposals, see Partial disposal examples.

Depreciable asset examples

Scenario:

  • Asset cost: $16,000.00

  • Accumulated depreciation: $13,000.00

  • Net book value: $3,000.00

  • Sales price: $7,000.00

Journal entry for a gain on sale

GL account

Debit ($)

Credit ($)
Asset   16,000.00
Accumulated depreciation 13,000.00  
Disposal 7,000.00  
Gain or loss   4,000.00

Scenario:

  • Asset cost: $16,000.00

  • Accumulated depreciation: $13,000.00

  • Net book value: $3,000.00

  • Sales price: $2,500.00

Journal entry for a loss on sale

GL account

Debit ($)

Credit ($)
Asset   16,000.00
Accumulated depreciation 13,000.00  
Gain or loss 500.00  
Disposal 2,500.00  

Scenario:

  • Asset cost: $16,000.00

  • Accumulated depreciation: $13,000.00

  • Net book value: $3,000.00

  • Sales price: $3,000.00

Journal entry for no gain or loss on sale

GL account

Debit ($)

Credit ($)
Asset   16,000.00
Accumulated depreciation 13,000.00  
Disposal 3,000.00  

Scenario:

  • Asset cost: $16,000.00

  • Accumulated depreciation: $13,000.00

  • Net book value: $3,000.00

  • Sales price: $0.00

Journal entry for a casualty, theft, or other loss

GL account

Debit ($)

Credit ($)
Asset   16,000.00
Accumulated depreciation 13,000.00  
Gain or loss 3,000.00  

Nondepreciable asset examples

Scenario:

  • Asset cost: $16,000.00

  • Sales price: $17,000.00

Journal entry for a gain on sale

GL account

Debit ($)

Credit ($)
Asset   16,000.00
Disposal 17,000.00  
Gain or loss   1,000.00

Scenario:

  • Asset cost: $16,000.00

  • Sales price: $3,000.00

Journal entry for a loss on sale

GL account

Debit ($)

Credit ($)
Asset   16,000.00
Disposal 3,000.00  
Gain or loss 13,000.00  

Scenario:

  • Asset cost: $16,000.00

  • Sales price: $16,000.00

Journal entry for no gain or loss on sale

GL account

Debit ($)

Credit ($)
Asset   16,000.00
Disposal 16,000.00  

Scenario:

  • Asset cost: $16,000.00

  • Sales price: $0.00

Journal entry for a casualty, theft, or other loss

GL account

Debit ($)

Credit ($)
Asset   16,000.00
Gain or loss 16,000.00  

Reversal example

When a full disposal is reversed, Fixed Assets Management creates a reversal journal entry that mirrors the original disposal journal entry. The debit and credit amounts are reversed to offset the accounting impact of the original full disposal.

Disposal journal entry

GL account

Debit ($)

Credit ($)
Asset   16,000.00
Accumulated depreciation 13,000.00  
Disposal 7,000.00  
Gain or loss   4,000.00
Reversal journal entry

GL account

Debit ($)

Credit ($)
Asset 16,000.00  
Accumulated depreciation   13,000.00
Disposal   7,000.00
Gain or loss 4,000.00