Costpoint Online Help

Using the Help Search
Using the Help Search
  • Phrase:Returns all topics that contain the exact phrase in the search criteria. Use quotation marks around the phrase.
    Ex."system administration"
  • And:Returns all topics that contain all the words in the search criteria, in any combination. Insert a plus sign between all words in the search criteria.
    Ex.system + administration
  • Or:Returns all topics with any combination of words in the search criteria. This is the default.
    Ex.system administration
For more information:Searching Online Help

Disposal Proceeds and Gain/Loss Examples

Example 1

This example illustrates a disposal for a depreciable asset with no disposal proceeds and no depreciation adjustment:

Asset Master record data:

  • Cost: $10,000.00
  • Accum Depr: $5,000.00

Manage Disposal Transactions screen data:

  • Price: $0.00

Screen Display in Table Window:

Cost Accum Depr Gain/Loss Depr Adj
10,000.00 5,000.00 -5,000.00 (Loss) 0.00

Fixed Assets Disposal Posting Entry (DISP):

Acct # Acct Desc Debit Credit
01220-001 Equipment 0.00 10,000.00
01245-001 Accumulated Depreciation 5,000.00 0.00
07250-001 Gain/Loss of Sale of F/A  5,000.00 0.00
10,000.00 10,000.00

In Example 1, the system calculates the loss displayed on the disposal entry screen, based on the asset cost, the accumulated depreciation, and the value in the Price field. Because the disposal price equals zero in this instance, the displayed gain/loss is equal to the posted gain/loss.

Example 2

This example illustrates a disposal for a depreciable asset in which there is a disposal price, but no depreciation adjustment:

Asset Master record data:

  • Cost: $10,000.00
  • Accum Depr: $5,000.00

Manage Disposal Transactions screen data:

  • Price: $3,00.00

Screen Display in Table Window:

Cost Accum Depr Gain/Loss Depr Adj
10,000.00 5,000.00 -2,000.00 (Loss) 0.00

Fixed Assets Disposal Posting Entry (DISP):

Acct # Acct Desc Debit Credit
01220-001 Equipment 0.00 10,000.00
01245-001 Accumulated Depreciation 5,000.00 0.00
07250-001 Gain/Loss of Sale of F/A 5,000.00 0.00
10,000.00 10,000.00

In Example 2, the system includes the value from the Price field to calculate the loss (disposal price minus book value) displayed in the table window. However, the entry posted for the disposal ignores the disposal price, and automatically posts only the difference between the cost and the accumulated depreciation (book value) as the loss.

This posting entry is balanced, but it is not complete. After Costpoint Fixed Assets posting, the loss on the disposal is overstated because the entry to record the disposal proceeds has not yet been made in the General Ledger. If the disposal proceeds are realized as anticipated, you must post an entry for cash, accounts receivable, and so on as appropriate outside of Costpoint Fixed Assets to bring the Gain/Loss account balance to the correct amount. A typical entry is illustrated below:

Acct # Acct Desc Debit Credit
01000-001 Cash - General Account 3,000.00 0.00
07250-001 Gain/Loss of Sale of F/A 0.00 3,000.00
3,000.00 3,000.00

The debit and credit entries to the Gain/Loss account will offset each other as a result of the two entries posted to the General Ledger. The actual loss of $2,000.00 will then be reflected in the gain/loss account balance.

Depreciation Adjustments

Depreciation adjustments are optional entries that you can enter for each book, as needed, using the disposal entry screen. Timing issues often preclude the necessity for a depreciation adjustment. A common situation that might require a depreciation adjustment occurs when the disposal is communicated "after-the-fact." If, for example, you learn that an asset record was disposed of two periods earlier, you may want to use a depreciation adjustment to reverse two months of depreciation posted to the General Ledger.

Note: To correct the situation, you could also enter and post two months of negative depreciation before you enter and post the disposal record. You reverse the excessive depreciation in the current accounting period and enter and post the disposal record the next accounting period before depreciation is computed or posted. We recommend this method (rather than a depreciation adjustment) because a cleaner audit trail is created.

Whether you enter a depreciation adjustment along with disposal data or include the adjustment in the current period depreciation before entering and posting the disposal will depend on how you want the final results to be represented:

  • If you want to include the adjustment to depreciation in the posted gain/loss amount, you should first manually edit the Current Pd Depreciation field on the G/L Book Info tab of the Manage Asset Master Information screen (or the Current Pd Depreciation field on the Manage Asset General Ledger Book Information screen) and post depreciation again for the period. In this manner, your adjustment to depreciation is not formalized into a specifically identified "depreciation adjustment," and the change to accumulated depreciation will automatically be included in the gain/loss computed by the system.
  • If you want to exclude the depreciation adjustment from the posted gain/loss amount, enter a depreciation adjustment amount in the Depr Adj field on the disposal entry screen. In this manner, the adjustment will never be included in the gain/loss computed by the system and will be posted as a separate DADJ entry, with debits and credits to depreciation expense and accumulated depreciation. (Note, however, that this leaves an amount in the accumulated depreciation balance sheet account equal to the amount of the depreciation adjustment. This amount will not be removed from the general ledger until an adjusting journal entry is posted.)
Note: If the depreciation expense account allocation code that you assigned to a depreciable asset (Acct Info tab of the Manage Asset Master Information screen and on the Manage Asset Account Information screen) includes percentage allocations over more than one account, the depreciation expense portion of the depreciation adjustment will be spread using the same expense allocation percentages per account.

Important

A positive depreciation adjustment displays as a positive value in the Depr Adj field. A positive value will increase (debit) the depreciation expense account(s) and increase (credit) the accumulated depreciation account when the depreciation adjustment is posted.

A negative depreciation adjustment displays as a negative value in the Depr Adj field. A negative value will decrease (credit) the depreciation expense account(s) and decrease (debit) the accumulated depreciation account when the depreciation adjustment is posted.

Example 3

This example illustrates a disposal for a depreciable asset in which there is no disposal price, but there is a $ 1,000 depreciation adjustment:

Asset Master record data:

  • Cost: $10,000.00
  • Accum Depr: $5,000.00

Manage Disposal Transactions screen data:

  • Price: $0.00

Screen Display in Table Window:

Cost Accum Depr Gain/Loss Depr Adj
10,000.00 5,000.00 2,000.00 (Loss) 1000.00

Fixed Assets Disposal Posting Entry (DISP):

Acct # Acct Desc Debit Credit
01220-001 Equipment 0.00 10,000.00
01245-001 Accumulated Depreciation 5,000.00 0.00
07250-001 Gain/Loss of Sale of F/A 5,000.00 0.00
10,000.00 10,000.00

Fixed Assets Depreciation Adjustment Posting Entry (DADJ):

Acct # Acct Desc Debit Credit
05430-001 Depreciation Expense 1,000.00 0.00
01245-001 Accumulated Depreciation 0.00 1,000.00
1,000.00 1,000.00

In Example 3, the amounts posted from Fixed Assets are identical to Example 1 for the disposal portion of the entry, because the system always ignores the disposal price. The system also ignores the depreciation adjustment for the disposal posting, even though the effect of the depreciation adjustment on the gain/loss value computation is displayed on the screen.

Note: This will leave a balance in the accumulated depreciation account. You will need to make a General Ledger journal entry to move this balance from the accumulated depreciation account to the gain/loss account.

Example 4

This example illustrates a disposal for a depreciable asset for which there is a disposal price as well as a depreciation adjustment:

Asset Master record data:

  • Cost: $10,000.00
  • Accum Depr: $5,000.00

Manage Disposal Transactions screen data:

  • Price: $3,000.00

Screen Display in Table Window:

Cost Accum Depr Gain/Loss Depr Adj
10,000.00 5,000.00 -1,000.00 (Loss) 1000.00

Fixed Assets Disposal Posting Entry (DISP):

Acct # Acct Desc Debit Credit
01220-001 Equipment 0.00 10,000.00
01245-001 Accumulated Depreciation 5,000.00 0.00
07250-001 Gain/Loss of Sale of F/A 5,000.00 0.00
10,000.00 10,000.00

Fixed Assets Depreciation Adjustment Posting Entry (DADJ):

Acct # Acct Desc Debit Credit
05430-001 Depreciation Expense 1,000.00 0.00
01245-001 Accumulated Depreciation 0.00 1,000.00
1,000.00 1,000.00

In Example 4, the amounts posted from Fixed Assets are identical to Example 3 for both the disposal entry (DISP) and for the depreciation adjustment entry (DADJ). The system ignores the disposal price for the disposal posting even though the effect of both the disposal price and the depreciation adjustment on the gain/loss value computation is displayed on the screen.

This posting entry is balanced, but it is not complete. After Costpoint Fixed Assets posting, the loss on the disposal is overstated because the entry to record the disposal proceeds has not yet been made in the General Ledger. If the disposal proceeds are realized as anticipated, you must post an entry for cash, accounts receivable, and so on, outside Costpoint Fixed Assets to bring the Gain/Loss account balance to the correct amount. A typical entry is illustrated next:

Acct # Acct Desc Debit Credit
01000-001 Cash - General Account 3,000.00 0.00
07250-001 Gain/Loss of Sale of F/A 0.00 3,000.00
3,000.00 3,000.00

The debit and credit entries to the Gain/Loss account will offset each other as a result of the two entries posted to the General Ledger. The actual loss of $2,000.00 will be reflected in the gain/loss account balance.

As in Example 3, accumulated depreciation posted as a result of a Depreciation Adjustment Entry (DADJ) in conjunction with a disposal will not be added back to or displayed in the Accum Depreciation field on the G/L Book Info tab or Other Books Info subtask of the Manage Asset Master Information screen (or the corresponding fields on the Manage Asset General Ledger Book Information and Manage Asset Other Books Information screens). Because of this, you will find that one or more accumulated depreciation balances from the Asset Master records do not reconcile with the General Ledger. You can, however, use the balance in the Gain/Loss account as a reconciling amount for accumulated depreciation if you do not want to make a reclassification journal entry.

To avoid this circumstance, you can follow this alternate procedure: If you want to include any adjustment to depreciation in the gain/loss calculated and posted by the system as a disposal from Fixed Assets (disposal price minus book value), you should first manually edit the Current Pd Depreciation field on the G/L Book Info tab of the Manage Asset Master Information screen (and the corresponding field on the Manage Asset General Ledger Book Information screen) and post depreciation again for the period, before you enter and post the disposal. In this manner, your adjustment to depreciation is not formalized into a specifically identified "depreciation adjustment," and the change to accumulated depreciation will automatically be included in the gain/loss computed by the system.

Note: The purpose of making a depreciation adjustment is to make up for too little or too much depreciation previously booked, before you post a disposal. Rather than being required to return to the Asset Master screen to enter and post this type of depreciation adjustment, you can enter a depreciation adjustment directly on the Manage Disposal Transactions screen.

Currently, a depreciation adjustment entered on a disposal screen does not automatically have any effect on the gain/loss posted as a result of the disposal. To preserve the audit trail for a depreciation adjustment made on a disposal screen, the depreciation adjustment debits or credits only the depreciation expense and accumulated depreciation accounts, as in a standard depreciation posting. Currently, if you have entered a depreciation adjustment on the Manage Disposal Transactions screen, you will need to manually make a final G/L entry to move the balance created in the accumulated depreciation account to the gain/loss account. In a future Costpoint version, we will automatically create and post this last entry during the disposal posting process.

Example 5

This example illustrates a disposal for a non-depreciable asset (for example, land) for which there is a disposal price.

Asset Master record data:

  • Cost: $75,000.00

Manage Disposal Transactions screen data:

  • Price: $50,000.00

Screen Display in Table Window:

Cost Accum Depr Gain/Loss Depr Adj
75,000.00 0.00 -25,000.00 (Loss) 0.00

Fixed Assets Disposal Posting Entry (DISP):

Acct # Acct Desc Debit Credit
07250-001  Gain/Loss of Sale of F/A 75,000.00 0.00
01210-001 Land 75,000.00
75,000.00 75,000.00

In Example 5, the system ignores the disposal price for the disposal posting even though the effect of the disposal price on gain/loss value is displayed on the screen.

This posting entry is in balance, but it is not complete. After Costpoint Fixed Assets posting, the loss on the disposal is overstated because the entry to record the disposal proceeds has not yet been made in the General Ledger. If the disposal proceeds are realized as anticipated, you must post an entry for cash, accounts receivable, and so on, outside Costpoint Fixed Assets in the General Ledger to bring the Gain/Loss account balance to the correct amount. A typical entry is illustrated below:

Acct # Acct Desc Debit Credit
01000-001 Cash - General Account 50,000.00 0.00
07250-001 Gain/Loss of Sale of F/A 0.00 50,000.00
50,000.00 50,000.00

The debit and credit entries to the Gain/Loss account will offset each other as a result of the two entries posted to the General Ledger. The actual loss of $25,000.00 will be reflected in the gain/loss account balance.

You cannot edit some fields/subtasks in an Asset Master record after a disposal has been posted or manually entered (for the purpose of preserving the audit trail). You cannot generally make edits to the following subtasks/fields in an Asset Master record that has already been disposed of (Record Status = Disposal):

  • G/L Book Info
  • Other Books Info (Exception: If no data is present in this subtask, you can enter and save new data.)
  • Account Info
  • Cost Info
  • Disposal Info (Edits prohibited for system-generated disposals. Manually entered disposal data can be edited.)
  • Manage Asset Master Information screen - Fields in the Record Status , Depreciation Status , and Depreciation Based On group boxes are not available for user entry.

Although you can access the fields in these subtasks, the Save button is disabled. Any field changes that you make will not be applied, and you cannot save your edits.

Note: If, by mistake, you enter and save manual data in the Disp Info tab of the Manage Asset Master Information screen for a record to which you have assigned a Disposal Record Status, you can clear the data from the Disp Info tab and change the Record Status back to Active.