- This topic has 3 replies, 4 voices, and was last updated 11 years ago by
.
- Posts
I post this question in P2 but it seems that if i post here i will get the answer more promptly so that i post here:D
As you know ,when you sell inventory or disposal asset… , the double entry is
Dr expense( disposal ) Cr inventory( asset)
Dr cash… Cr revenue( disposal)
Then in the case ur company sell a brand or customer list and have no right use it( ie transfer the right to ur customer ),then it need to derecognise the asset ( dr expense cr asset)
But as there is no asset here in the fs , how can it be derecognisedWhen you sell inventory (at least according to the UK principles and the examiner and markers!) the double entry is Dr Cash (or receivables) and credit sales / revenue. There is NO ENTRY in the Inventory Account
When a tangible non-current asset is sold, the double entries are Dr Disposal Account Cr TNCA Cost Account, Dr Accumulated Depreciation Account Cr Disposal Account, Dr Cash (or receivable) Cr Disposal Account (with disposal proceeds. Then balance off this Disposal Account and enter the missing debit or credit in the Statement of Income as an expense (loss) or sundry income (profit on disposal)
The answer to your question would be to Dr Cash (or receivables) and Cr Sundry Income Account
If you continue to have a problem with this, post again on F7 Ask the tutor on this site
- You must be logged in to reply to this topic.