Asset depreciation and sale

You would need a journal to reverse the original purchase amount and the accumulated depreciation, and post the difference (essentially the net book value of the asset) to 4200 Sales of Assets. For example, if the accumulated depreciation was £500 then you would journal

  • Credit 0050 Motor vehicle £3350 (to get it off your balance sheet)
  • Debit 0051 Motor vehicle depreciation £500 (or whatever amount you’ve previously depreciated against this asset)
  • Debit 4200 Sale of Assets £2850 (balancing figure - the NBV)

Then raise a sales invoice, also against 4200 Sales of Assets for the £3000 you sold it for (plus VAT, if you’re VAT registered). After this, the asset will be gone from your balance sheet, and 4200 will show the net profit of £150 (the difference between the NBV and the amount you sold it for - if the book value was more than £3000 then it would show a net loss).

You could do it all with a single journal if you’re not VAT registered, but I think the sale invoice method is (a) simpler to understand anyway and (b) integrates with QuickFile’s VAT handling if you are VAT registered.

(NB I’m not an accountant, check with yours if you want a second opinion - in particular the net gain or loss in your accounts depends on your choice of depreciation method, but the amount you use for tax purposes depends on how you claimed capital allowances against it, which may be different)

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