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John Moffat.
John Moffat.-
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sharifmangalzai
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Dear sir,
when we dispose of a non current asset: why we are record disposal account as Dr and Cr non current asset cost.
when we record a transaction there will be increase or decrease in five element ( asset, liability, Revenue, capital, liability) then in this explanation why we record disposal account as Dr, in which element increase or decrease have been made .
John Moffat
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A non-current asset is a debit balance. Therefore when the asset is sold, we need to credit the account to remove the balance.
The double entry is to debit the disposal account and it is in the disposal account that we calculate the profit or loss on disposal.
You really need to watch the free lectures on depreciation – our lectures are a complete course covering everything you need to pass F3 well.
(To think of transactions as increasing or decreasing five elements is not the way to think about double entry – again I do suggest that you watch all of our free lectures.)
sharifmangalzai
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