[yourerica]

I am still confused ” with

@mikelittle said:
nicky, the company has Dr Cash and Cr Revenue. We need to “undo” that entry so Dr Revenue and Cr Cash. OK, now we can do the correct entries:
Dr Disposal a/c 900 Cr TNCA Cost a/c 900
Dr Accum Depn 630 Cr Disposal a/c 630
DR Cash 300 Cr Disposal a/c 300
That leaves a balance on Disposal a/c of 30 and it’s a profit.
Can you accept that a profit ( or loss ) on disposal of an asset is, in effect, an over- ( or under- ) provision for depreciation in prior years?
And if depreciation is charged to Cost of Sales a/c, then surely a gain on disposal of an asset should be used to reduce the cost of sales ( a loss would increase the cost of sales ).
And that’s what BPP have done
Dr Disposal a/c 30 Credit Cost of Sales 30

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could you pls explain further cause i thought the cash should be adjusted given that the wrong entry was recorded before. Thanks a lot !

[yourerica]

Hi, Njiya, i have an another problem regarding the question you discuss above. The impariment of goodwill are charged against to the retained earnings of S for consol of financial position. I wonder why coz i thought good impairment should be charged against P’s earnings. Thank you very much!

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