Write Off (Sell a Fixed Asset)

Writing off (or selling) a fixed asset is done in a two steps process (ensure all depreciation for the year has been done BEFORE doing the write offs):

Step 1

The first thing to do is to SELL the asset in the Fixed Asset Register. Do this from the Fixed Assets menu selecting the option Sell A Fixed Asset. Select the asset to be sold, enter the date of the sale and the amount it sold for – If you are writing it off, leave the SALE value as zero. The software will then display if there is any LOSS or GAIN amount as a result: TAKE NOTE OF THIS VALUE and complete the sale process.

This first step will make the balance of your asset show as zero in the fixed assets register. The asset will remain in your fixed assets reports during the year it was sold – it will only disappear from your reports on the following year.

Step 2

Create a Financial Journal (because only the LOSS or GAIN from the write off or sold ones goes through onto your balance sheet):

DEBIT the Accumulated/Prov Deprn code for the item written off/sold.

CREDIT the Cost price code for the item written off/sold).

The amount of the journal will be:

the total purchase value of the asset

MINUS   the LOSS on Sale amount

OR

the total purchase value of the asset

PLUS    the GAIN on Sale amount

The date of the journal will be the same date used in the write off done on step 1.

This second step will remove the sold asset from your balance sheet on the date of sale, so you don’t carry the value of the asset and its accumulated depreciation in the balance sheet after the sale.