Assume that the disposal sale transaction occurred in a company that decided to sell a car, which is a fixed asset. This transaction that took place of selling a fixed asset occurred through the free text invoice in Accounts receivable. The posting profile of a disposal sale considers the following:
- Depreciation (prior years): The total depreciations of prior years will be reversed; the ledger account is the accumulated depreciation account, and the offset account is the fixed assets gain/loss account.
- Depreciation (this year): The total depreciations of the current year will be reversed; the ledger account is the accumulated depreciation account, and the offset account is the fixed assets gain/loss account.
- Acquisition value: The acquisition value will be reversed; the ledger account is the fixed assets account, and the offset account is the fixed assets gain/loss account.
- Net book value: The ledger account is the fixed assets gain/loss account, and the offset account is also the fixed assets gain/loss account.
In order to set up a fixed assets posting profile, go to Fixed assets | Setup | Fixed assets and select Disposal | Sale, as shown in the following screenshot:
The generated entry will be as follows:
- Dr. Accumulated depreciation account
- Dr. Fixed assets gain/loss account
- Dr. Accounts receivable
- Cr. Fixed assets gain/loss account
- Cr. Fixed assets gain/loss account
- Cr. Fixed assets account
There are some scenarios in daily business that require reversing fixed asset transactions. This can be executed from the fixed asset journal, as shown in the following screenshot. Now, go to Function and select Retrieve fixed asset transactions. Then, select New voucher number per transaction in order to generate a new voucher number, and check Invert sign to invert the transaction sign from the original one. To select a particular fixed asset, click on the Select button and add the asset number.
The following screenshot illustrates the retrieved fixed asset transaction with an invert sign. You can see a minus sign on the debit side, which means it is a credit, and a minus sign on the credit side a means debit.
