How do I dispose of a Fixed Asset / sell a fixed asset? (2024)

To dispose of a Fixed Asset:

Simply depreciate the asset in full. Once the asset balance is reduced to zero you can record it as disposed of in your year-end accounts.

When you sell a Fixed Asset:

When you sell a Fixed Asset you need to account for the removal of the asset from your Balance Sheet and the receipt of the sale proceeds.

For example, your organisation sells some freehold property valued at £250,000 for the sale price of £270,000 (net proceeds).

To account for this:

• Step 1: Depreciate the asset in full (as above) but record the depreciation as an expense against a specific expenditure category called 'Asset Sale'

• Step 2: Record the cash receipt of sale proceeds via the Mixed-Incomescreen as:
  • £250,000 of negative expenditure;
  • £15,000 of Income (Other), described as sale proceeds from freehold property and allocated to the category of your choosing (if recording the net amount).
  • If you have incurred sale fees and charges, you can also account for these within this Mixed-Income screen by recording the gross amount of income (as shown below) and offsetting it with the necessary expenditure.

By following this method the expenditure shown in the Asset sale category (depreciation) will either be zero or be the sales fees incurred (£5,000 in the screenshot below).

The total income for the transaction remains purely the 'profit' element as the remainder of the £270,000 deposit has been offset against the disposal of the asset.

To help you better understand the Fixed Assets module as a whole,please visit the module overview page here.