The accounting treatment of asset disposals


Although capital assets are by definition " assets intended to be used in a sustainable manner for the business of the enterprise  ", it may happen that a company decides to sell it. This sale, which is generally carried out for economic reasons, is subject to a special accounting treatment Because the date is a key element for an accounting entry , it is important to know when to register an asset transfer .
Generally, it is recognized on the day of the transfer of the control of the property , ie the day of transfer of ownership between the two parties.
However, special conditions may change the situation. This is the case, for example, where the contract of sale includes a retention of title clause or a suspensive condition. In these specific situations, the disposal of the fixed asset can be recorded on the effective date of delivery to the buyer.
The accounting entries for a disposal of fixed assets are rather complex . It must be said that the recording will be realized in three stages  :
Accounting for the disposal of the property of the company
This step will involve debiting the "675 - Accounting Values ​​of Assets Sold" and "28 - Amortization of Fixed Assets " accounts and offsetting the "2 - Fixed Assets" account by the same amount.
The recognition of proceeds from the sale of the asset
Since it is a question of sale, the company will benefit from a financial contribution . This step will require debiting account "462 - Receivables on disposals of fixed assets" (or the "512 - Bank" account in certain situations) and to credit accounts "775 - Proceeds from the sale of assets" and '4457 - VAT collected'
The possible realization of a capital gain or a loss of value will be observed by comparing the previously mentioned account 775 and the account "675 - Net book value of assets sold"
The reversal of the possible depreciation of the fixed asset
Having become devoid of purpose as a result of the transfer, any provision for the transferred property must be reversed. It will therefore be necessary to debit account "29 - Impairment of fixed assets" and credit account "7816 - Reversal of depreciation of fixed assets".

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