1. DEPRECIATION - DISPOSALS Week 2 – Session 2

2. Objectves Learning objectives: At the end of this chapter you will be able to: Account for the disposal of a non-current asset Account for the part exchange of a non-current asset Record entries for the acquisition and disposal in the non- current asset register

3. Process Firstly open a disposal T Account, then: Step 1 - Remove the original cost of the disposed asset from the asset account Dr Disposals Cr Non-current asset cost Step 2 - Remove the accumulated depreciation of the disposed asset from the accumulated depreciation account Dr Non-current asset accumulated depreciation Cr Disposals Step 3 - Enter the sale proceeds received/receivable for the disposed asset Dr Bank/Receivable Cr Disposals Step 4: Balance off the ledger accounts and calculate whether a profit or loss has been made on disposal

4. Disposals Account Used to make the entries relating to the disposal of a non- current asset. It has two purposes: To remove the existing balances relating to the disposed asset. To calculate whether a profit or a loss has been made on disposal.

5. Example - Veronica Step 1 - Remove the original cost of the disposed asset from the asset account Dr Disposals Cr Non-current asset cost

6. Example - Veronica Step 1 - Remove the original cost of the disposed asset from the asset account Dr Disposals Cr Non-current asset cost Step 2 - Remove the accumulated depreciation of the disposed asset from the accumulated depreciation account Dr Non-current asset accumulated depreciation Cr Disposals

7. Example - Veronica Step 1 - Remove the original cost of the disposed asset from the asset account Dr Disposals Cr Non-current asset cost Step 2 - Remove the accumulated depreciation of the disposed asset from the accumulated depreciation account Dr Non-current asset accumulated depreciation Cr Disposals Step 3 - Enter the sale proceeds received/receivable for the disposed asset Dr Bank/Receivable Cr Disposals

8. Example - Veronica Step 1 - Remove the original cost of the disposed asset from the asset account Dr Disposals Cr Non-current asset cost Step 2 - Remove the accumulated depreciation of the disposed asset from the accumulated depreciation account Dr Non-current asset accumulated depreciation Cr Disposals Step 3 - Enter the sale proceeds received/receivable for the disposed asset Dr Bank/Receivable Cr Disposals Step 4 - Balance off the Disposals ledger account to calculate whether a profit or loss has been made on disposal

9. Question 1 – Jeremys Jingles

11. Question 2 – Marys Cakes Extension questions 3-15

12. Question 2 – Marys Cakes