disposal of plant for cash

This topic has 5 replies, 4 voices, and was last updated 3 years ago by mrjonbain.

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April 25, 2012 at 8:51 am #52361
QIN
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Dec 08 Q2-Candel, On 1 Oct 07 an item of plant was disposal of for 2.5m cash.
My problem is this 2.5m removed from sales revenue (I am ok for it), where is it then? Why not in other comprehensive income when we are doing SI?
April 25, 2012 at 9:18 am #96779
Najiya
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Entries for disposal.
1)Dr. Disposal a/c 8m
Cr. Asset a/c 8m
2)Dr. Accumulated depreciation 4m
Cr. Disposal a/c 4m
3)Dr. cash 2.5m
Cr. Disposal a/c 2.5m
Carrying value of asset is 8m-4m = 4m.
Disposed off @ 2.5m
Thus, loss on disposal is 4m-2.5m = 1.5m
this will be taken to the IS, under cost of sales.
entry for loss on disposal is:
4)Dr. IS 1.5m
Cr. Disposal a/c 1.5m
April 26, 2012 at 3:12 am #96780
QIN
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Thanks, but why Dr. cash 2.5m is not shown in SoFP as Cash 2.5m or Bank offset bank overdraft 1.3m per question.
April 26, 2012 at 4:27 am #96781
Najiya
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hi,
you are welcome!
Qn says, the proceeds of disposal have been treated as sales revenue by Candel; i.e, following entry was recorded:
Dr. Cash 2.5m
Cr. Sales 2.5m
Debit side is correctly entered. Thus, no more adjustments required for that.
October 13, 2021 at 11:58 am #637612
daewoo2000
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HI,
If the item if fully disposed… so after the disposal of item, will be showed or not?
October 13, 2021 at 12:21 pm #637617
mrjonbain
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Not entirely sure what you mean daewoo2000. Once asset is no longer under the control of entity then it will no longer shown in accounts of company. Hope this helps.
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