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Q. An asset whose NBV is $40000 is sold for $50000.
A : Dr Cash $50000
Cr Equity $10000
Cr Asset $40000I assume that you are wanting me to tell you whether or not your answer is correct?
If you are – then yes!
(Although obviously we would normally know the cost and the accumulated depreciation separately in which case we would need to enter in each account and use a disposal account. Also the profit of $10,000 would be credited to the SOPL which would then increase the retained earnings and hence equity.)
Have you watched my free lectures on this? The lectures are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well.
Yes, I wanted you to check my answer. I was actually trying to brush up my debit credit knowledge. I cleared my F3 paper long ago and planning to give F7 in Sept. The above question I asked actually appeared in an F5 paper for calculating ROI. So while solving that I wondered what would be double entry for such a transaction.
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