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AIA claimed sale - again

This is driving me mental, again!

We bought some speakers for 500 and claimed full AIA and sold it for spares £200

I created an Invoice and used the cog to allocate it to sale of asset and it showed up in the PandL as £200 which is what I expected.

I followed the instruction to then remove it from the balance sheet, but every effort I make to do that journal results in changes to the p and l.
How on earth do I remove it from the balance sheet and reflect the income? Remembering that we have already claimed the full AIA.
I was given a few suggestions last time, and it seemed to work but I hav huge doubts now that any of that was right (different item)

OK,
So I simplified it to get my head round this,
I have
made a sales invoice for sale of asset £200 resulting in an increase of turnover

then Journaled
cr capital assets 500
dr sale of assets 500
resulting in a £300 credit on the sale of assets on the P and L

I then Journaled
cr sale of assets £300
and dr my own account “disallowed expenses”
However, this leaves my turnover overstated I believe as sale of assets should not be in turnover?

This

Unless it’s already fully depreciated then I would expect that to be the case. Setting the invoice to “sale of assets” puts the total received for the sale into income, then when you reverse the purchase price and accumulated depreciation off your balance sheet and put the balance onto sale of assets this corrects the P&L so sale of assets shows the actual gain or loss on disposal (what you sold it for minus the net book value at the time).

The fact you claimed AIA when you bought it is irrelevant, that’s a tax return adjustment rather than anything that gets reflected in the QuickFile books.

There should be a code in the profit and loss account called something like “Profit or loss on disposal of fixed assets”. This is where all the entries should be collected so that it ends up showing the profit or loss on sale in the overheads section. It can then be disallowed in your tax return along with depreciation.
So, when you dispose of the asset:
Dr. Profit/loss on disposal - original cost
Cr. Fixed Assets
Then
Dr. Accumulated depreciation
Cr. Profit/loss on disposal
This should result in a balance of nil in your balance sheet for that asset and an entry equivalent to it’s net book value showing as profit/loss on disposal.
Finally, raise the sales invoice for the sale and tag that to profit/loss on disposal too.
When you come to do your tax return, you will have to add back any loss on disposal as well as depreciation. Then when working out your capital allowances, you need to enter the disposal proceeds and also a balancing charge or allowance depending on whether you made a profit or loss on the sale. This accounts for the remaining capital allowances available - or claws back any that have ended up being over claimed in prior years.

I dont believe there is any account called profit loss on disposal and I have read them all.

Hi,
Thank you.
I have found the account. It is called gain or loss.
What I cannot acheive iis raising an invoice and tagging it to a gain or loss on disposal. it is automatically tagged to the bank and if I untag the payment and tag that payment to the gain or loss account, it leaves an unpaid invoice

is referring to where you clicked the cog wheel icon on the invoice editor and chose sale of assets - @cbstephensaca is suggesting that you choose the gain/loss category here instead of the sale of assets one. If it’s not available as an option then you either need to edit the settings for the gain/loss nominal in the chart of accounts and tick the box to allow it on sales invoices, or just journal the sale of assets amount over to gain/loss at the same time as you reverse the purchase price and depreciation.

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Yes, sorry, tagging refers to the payment, which needs to be allocated to the invoice. As @ian_roberts correctly pointed out I meant when you raise the invoice, choose the gain/loss nominal rather than sale of assets. Thanks @ian_roberts

thank you @cbstephensaca and @ian_roberts, do either of you know how to achieve this adjustment to make this option available? Im searching but cannot find it.

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Find the relevant nominal in the chart of accounts and there should be a button next to it (probably a cog wheel again, I’m not at my laptop to check) to edit the settings of that nominal account.

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Yes, the cog wheel should be coloured yellow and when you click it, there is a tick box with the option “Allow this code to be used in sales invoices”

I found it! I dont know why these cogs dont register in my line of sight!
Although, somewhere along the line it is now adding the difference to my capital assets instead of removing it.

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Are you sure you have all your journals the right way round :slight_smile:

@cbstephensaca Im not sure, Im going to try again from the start. I swear, Ive been trying to fix this for about 6 hours…

@cbstephensaca

I have journaled
Gain or loss on sale of asset CR 500
Capital Expenditure DR 500
then
raised a sales invoice and tagged it to Gain or loss on sale of asset £200

The result is an Increase of £300 on the fixed assets on the balance sheet, and £500 showing on the PandL

ok, so the first journal should be to remove the cost from the balance sheet:
DR. Gain or loss (P&L)
CR Fixed Assets (B/S)
£500

If the asset has been depreciated, you will then need to remove the depreciation also:
DR Accumulated depreciation (B/S)
CR Depreciation charge (P&L)
£xxx

Then, when you raise the sales invoice for £200, code it to Gain or loss - this will be a CREDIT.

Net effect should now be nil showing in fixed assets, and £300 in gain/loss as a DEBIT, i.e. loss (that would be assuming no depreciation!)

This Increases my total fixed assets from 23500 to 23800

Fixed assets should show as a debit in the balance sheet. If you debit them with £500 it should therefore reduce them overall.
Are you sure the gain/loss nominal code is in the P&L and not the balance sheet?
It should be in the overheads section.

If you can’t find it, I would add a new one, in a similar range to the depreciation codes so the 8000s.

Without seeing your trial balance I can’t really see where youu are going wrong :frowning:

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