Disposal of Asset in Sage (HP Creditor)

Disposal of Asset in Sage (HP Creditor)

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Hi, I am having trouble to figure out the impact of a disposal which was a HP asset?

I did the following entries in Sage50 Accounts when client acquired the asset:   

Sage Code Description DR CR
0020 Plant Addition 55k  
2201 VAT 11k  
2310 HP Creditor   51k
1200 Bank   15k

Now the client has sold the asset for £20k, it had an accumulated depreciation of £22k and the HP creditor balance at the date of sale was £18k.

 

What would be the correct entry to post in Sage50 Accounts also taking into consideration the VAT element payable to HMRC and how to clear off the HP Creditor balance in Sage.

 

Thanks

Replies (4)

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By johngroganjga
06th Aug 2019 19:37

I am not sure what you are finding difficult. You just account for the transactions that have occurred, which you seem to have a good understanding of, except you don’t mention what happened to the HP liability on the sale of the asset.

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Replying to johngroganjga:
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By billy009
07th Aug 2019 12:39

The machinery was returned to the lending company. The main concern I have there is as the balance on the HP liability was only 18k and the sale price was £20k, do I record this as profit on disposals or other income?

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Replying to billy009:
By johngroganjga
07th Aug 2019 12:56

So has the client kept the £2,ooo difference?

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Replying to johngroganjga:
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By billy009
13th Aug 2019 11:31

Sorry for the late reply, as per the client everything is paid off and the balance is NIL. He has no idea if he has paid them more or vice versa.

I guess I will just treat it as profit on disposal.

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