Journal Entry for Asset Items That Are Scrapped
When you dispose of an asset item by scrapping it, a journal entry is automatically posted for it when you process the disposal in .
General ledger entries are not made for additional books, if any are set up.
The journal entry records:
- The reversal of the asset item's accumulated depreciation and depreciation basis.
- Any gain or loss, if the asset item is not fully depreciated when it is disposed.
The following accounts are debited and credited:
| Account | Debited | Credited |
|---|---|---|
| Accumulated Depreciation | X | |
| Asset | X | |
| (Loss) | X | |
| Gain | X |
Example
Asset item A has a useful life of 24 months and is depreciated using the straight-line method.
You processed depreciation for the asset item for 12 months.
You dispose of the asset item in the 13th month as scrap.
The following table shows the entries for the asset item in the Equipment Info Center for the general ledger book and an additional book if you have one set up.
| General Ledger Book | Additional Book | |
|---|---|---|
|
Acquisition Cost
From the GL Cost and Additional Book tabs in the Equipment Info Center |
$10,500 | $10,500 |
|
Business Use Percent
From the GL Cost and Additional Books tabs in the Equipment Info Center |
100% | 100% |
| Net Cost | $10,500.00 | $10,500.00 |
|
Additional Cost
From the Additional Books tab in the Equipment Info Center |
Does not apply | $1.00 |
|
Salvage Value
From the GL Cost and Additional Books tabs in the Equipment Info Center |
$500.00 | $500.00 |
|
Additional First Year Depreciation
From the Additional Books tab in the Equipment Info Center |
Does not apply | $100.00 |
|
Section 179
From the Additional Books tab in the Equipment Info Center |
Does not apply | $100.00 |
|
Depreciation Basis
From the GL Cost and Additional Book tabs in the Equipment Info Center |
$10,000.00 | $9,801.00 |
The following table is a summary that shows 12 months of depreciation for asset A and the loss asset when you scrapped asset A.
| General Ledger Book | Additional Book | |
|---|---|---|
|
Accumulated Depreciation for 12 Months
For GL Book, this was posted to your general ledger when you processed depreciation. |
$5,000 | $4,900.50 |
| Disposal (amount not depreciated when the asset item is disposed) | $5,500.00 | $5,400.50 |
| Gain or (Loss) | ($5,500.00) | ($5,400.50) |
The following table shows the accounts for your GL Book that are debited and credited when you run disposal processing for asset item A and a journal entry is automatically posted.
| Account | Amount Debited | Amount Credited |
|---|---|---|
| Accumulated Depreciation | $5,000.00 | |
| Asset | $10,500.00 | |
| Gain or (Loss) | $5,500.00 | |
| TOTAL | $10,500.00 | $10,500.00 |