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XYZ Ltd sold a revalued asset for cash & made a profit on the sales. What then is the Correct double entry to record the transact?

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تم إضافة السؤال من قبل Atasang Kingsley Ateno , Financial Manager , Qatar Golf International
تاريخ النشر: 2015/02/28
مستخدم محذوف‎
من قبل مستخدم محذوف‎

So to answer in step by step basis;

 

Initially the asset is recognised:

 

Dr.  Asset @ Cost

       Cr. Loan account or bank account.

 

Annually depreciation is recognised.

 

Dr. Depreciation P&L 

      Cr.   Accumulated depreciation - SFP

 

Then asset is revalued:

 

Dr.  Asset new value at the beginning of financial year (revaluation)100%Dr.  Accumulated depreciation (the value at beginning of the year) 

       Cr.  Asset @ Cost (Initial)

       Cr.  Revaluation reserve (OCI)

 

There would be deferred tax effect as well, but leaving this out of the entries.

 

Each year the asset will continue to be depreciated over the remaining useful life.

 

The revaluation reserve will also unwind reducing over the useful life of the asset.

 

Now the sale:

 

Dr.  Accumulated depreciation

Dr.  Revaluation reserve (OCI)

Dr.  Deferred Tax balance (SFP)

Dr.  Bank with the proceeds on sale

       Cr. Asset @ revaluation 

       Cr. Income Tax (Income Statement)

       Cr.  balancing figure is the profit on sale.

 

Thank you, it was a great question.

 

Alsayed Mamdouh
من قبل Alsayed Mamdouh , Senior Accountant , Hujra Group For Hotels And Resorts Maintenance & Operations

DR  - CASH 

DR-  ACCUMULATED DEPRECIATION8  

   CR - ASSETS  

CR - OTHER GAIN ( gain from assets sales  ) 3

 

 

Danish Muhammad Younus
من قبل Danish Muhammad Younus , Accounts Executive , YUNUS TEXTILE MILLS Ltd

Dr : Cash

Cr:NBV of Asset

Cr Profit on assets (credit to p & L).

Previous revalued gain transferred from Other comprehensive income.