ramesh
Answered On : Nov 21st, 2006
At the time of addition
Assets NA account -------dr
To asset clearing account ----CR
At the time of retirement
the nbv amount has been moved to the gain & loss account.
In sale case
we need to pass a journal entry to transfer the amount from gain & loss account cr and asset sale clearing account cr.
I hope u will understand the entires
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When asset is added:
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Asset Cost A/C Dr
Asset Clearing A/C Cr
When there is a change in the Asset:
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If change impacts increase in asset cost
Asset Cost A/c Dr
Asset Clearing A/C Cr
in payables the entry would be
Asset Clearing A/c Dr
A/c Payables Cr
If the change reduces the asset cost, reversal entry.
When there is transfer of Asset:
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Transfer of asset impacts two accounts
Accumulated depreciation and asset cost
When there is change in location
say, asset has been transferred from SF to NY
then,
Asset Cost (NY) Dr
Asset Cost (SF) CR
and then , because of change in location accumulated depreciation will also change.
Accumulated depreciation (SF) Dr
Accumulated depreciation (NY) Cr
When there is revaluation
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if the asset has been revalued at the current market price, the revalued value is credited to Accumulated depreciation and revaluation reserve in the ratio of Accoumulated Depreciation and NBV.
The entry would be
Asset Cost Dr
Accumulated Depreciation Cr
Revaluation Reserve Cr
the other entry is
Asset cost Dr
Revaluation reserve Cr
Accumulated Depreciation Dr
Revaluation reserve Cr
When there is retirement of asset:
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When loss due to retirement:
Accumulated Depreciation Dr
Proceeds of sale Dr
Gain/ Loss Dr
Asset Cost Cr
When gain due to retirement
Accumulated depreciation Dr
Proceeds of sale Dr
Asset cost Cr
Gain Cr
Pls let me if you find any thing incorrect there.
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