sale of assets

sale of assets

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I use Sage accounting software.

I sold an asset and made the usual entries. i.e. Db bank  with sale proceeds (Say £10,000)  cr asset account with net sale proceeds (say 8510.64),  cr vat with vat element on sale proceeds.(say 1489.36).

I then made the necessary journals  i.e. cr asset account BS with original cost of asset (say £18,000)  db Sale of Assets P&L with original cost of asset (say £18,000)

Cr. Asset Depreciation account BS  with total depreciation of this asset to sale date (say £600).  db Sale of Assets account P&L with total depn to date of sale (say £600).

These entries then produced a loss of (£9489.36) on the P & L account of the business.

When I do my Tax computations, 

ON the business P & L account "expenses side":-

I have to add back any depreciation accounted for  and deduct my capital allowances calculation.  allowing also for any balancing chargesor allowances.

But what about the "income side" on the business P & L?

do I need also to adjust the entries made to the sale of ASsets account to show the total nett sale price of the asset rather than the adjusted figure as outlined above 

It seems to me if I do not do this, that I am actually adjusting the P & L account twice for the same entry. One on the Business P & L and again on the capital allowances calculation at the bottom.

Can anyone explain the correct procedure for me?

                                                                      

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By Peter Kilvington
25th Feb 2014 10:59

Add back depreciation and loss

Profit per accounts

Add back

Depreciation

Loss on sale

Entertaining

Other non tax allowable expenses

Less

AIA

WDA

Balancing allowance

 

Depends where you van sits in you pools as to the exact treatment.  This maybe an out of date presentation as the wordings may have changed but the method is right.  You may have private restrictions and if you have the sale of a van you normally have a replacement.

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