Disposing of an asset

What this does

When an asset leaves the shop, its cost and its accumulated depreciation come off the balance sheet, and the difference between what you got for it and its net book value is a gain or a loss. Dispose Asset on the asset's page does all of that in one entry.

Before you start

accounting.manage. Run depreciation through the month of disposal first, so the net book value is current; the gain or loss depends on it.

Steps

On the asset page, Dispose Asset: Disposal Date, Method (Sold, Scrapped, Traded In), Sale Amount (zero for scrapped), Notes. Confirm. The asset's status becomes Disposed and it drops out of future depreciation runs.

What happens in the books

One entry dated the disposal date: Dr Accumulated Depreciation for everything posted against the asset, Cr the asset account for its full cost, and, if there were proceeds, Dr Cash (account 1000) for the sale amount. The difference posts to Gain on Disposal of Assets (8210) or Loss on Disposal of Assets (8220); the app creates those accounts if the chart doesn't have them.

The proceeds land in the general Cash account, not a specific bank account. When the buyer's money reaches the bank, record the bank credit from the Transaction Inbox as other money with the offset account set to Cash (1000), which moves it from the placeholder to the real account. For a trade-in, the "sale amount" is the trade allowance, and the new asset is added at its full price.

Common problems

The gain looks too big. Depreciation wasn't run through the disposal month, so the net book value is high and the gain is understated, or the reverse. Reverse the disposal by journal entry, run depreciation, and dispose again.

"Asset is not active." It's already disposed or retired.

I scrapped it but the register still shows it Active. Dispose it with a zero sale amount rather than editing the status; the balance sheet needs the entry.