Creating and Posting Disposals

You can enter disposal information to be posted for both depreciable and non-depreciable active assets on the Manage Disposal Transactions screen.

After you enter and save the disposal data for an asset record, you can place the disposal on hold or select the record for posting. This special topic explains which disposal data affects the General Ledger and also offers different disposal examples and shows how data is moved as a result of the posting process. In addition, this topic offers advice on how to enter data on the Manage Disposal Transactions screen.

Note: This topic applies only to disposals of depreciable assets and to non-depreciable assets for which the Post Disposal to G/L check box has been selected in the Depreciation Status group box of the Manage Asset Master Information screen (or the Post Disp to G/L check box on the Manage Asset Description Information screen).

Disposal data for non-depreciable assets for which the Post Disposal to G/L check box is clear is never posted.

On the disposal entry screen, you can enter the disposal date, disposal description, disposal type, disposal document number, and disposal price for a non-depreciable asset for which posting entries will not be made, but none of this information affects the General Ledger.

You can post disposal data to the General Ledger only for the G/L Book. The system computes and stores disposal data for your optional other books, but no postings take place.

For a depreciable asset and a non-depreciable asset for which you have selected the Post Disposal to G/L check box, you must also enter a General Ledger account/organization/project/ reference 1/reference 2 combination to which the gain or loss for the disposal will be posted. (The gain/loss account combination is required, even if there is no gain or loss on the disposal.) Although the entry screen calculates and displays a gain/loss amount that includes both the disposal price and any depreciation adjustment entered on the screen, the displayed gain/loss amount is only the EXPECTED gain or loss based on the EXPECTED disposal price. Regardless of the gain or loss displayed on the entry screen, the book value from the Asset Master record is always posted as the gain or loss. Depreciation adjustments entered through the disposal entry screen are always posted as separate entries.

For a non-depreciable asset, for which you have selected the Post Disposal to G/L check box, the cost value with the sign reversed is always posted as the gain/loss amount.

Disposal data for depreciable assets (and for non-depreciable assets for which the Post Disposal to G/L check box has been selected) is posted only for the G/L Book. Disposal data for optional books 2 to10 are never posted, although the data is written back to the Asset Master record during the G/L Book posting for each optional book used.

The entry posted for a disposal for depreciable assets normally debits accumulated depreciation, credits cost, and posts the difference as either a debit or credit to gain or loss. The Total Cost field and the Accum Depreciation fields on the G/L Book Info tab of the Manage Asset Master Information screen (and the Accum Depreciation and Total Cost fields on the Manage Asset General Ledger Book Information screen) are not changed by the disposal entry, even though the disposal posting reduces the G/L balances by these amounts for each disposal record posted. In the case of non-depreciable assets (for example, land), the G/L entry on disposal can consist only of debits and credits to the Cost (Asset) and Gain/Loss on Disposal of Fixed Assets accounts, because there is no accumulated depreciation associated with a non-depreciable asset.

A disposal entry is identified in the Fixed Assets Journal as "DISP." The gain/loss that displays on the Manage Disposal Transactions screen is designed to display the EXPECTED gain or loss based on the EXPECTED disposal price. Therefore, for depreciable assets, the book value amount from the Asset Master record is always posted as the gain or loss and the disposal proceeds are ignored, regardless of the gain/loss displayed on the disposal entry screen. For non-depreciable assets for which the Post Disposal to G/L check box has been selected, the cost value with the sign reversed is always posted as the gain/loss amount and the disposal proceeds are ignored, regardless of the gain/loss displayed on the disposal entry screen.

For depreciable assets only, an optional depreciation adjustment entry may also be posted if you have entered a value in the Depr Adj field on the Manage Disposal Transactions screen. A depreciation adjustment entry is identified in the Fixed Assets Journal as DADJ. This type of entry is designed to add to or reduce depreciation expense by debiting and crediting depreciation expense and accumulated depreciation, as appropriate. The gain/loss displayed always reflects any depreciation adjustment entered. Regardless of the gain/loss displayed on the disposal entry screen, the book value amount from the Asset Master record is always posted as the gain or loss for the disposal entry, ignoring any disposal proceeds, and the depreciation adjustment is always posted as a separate entry.

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 concluding G/L entry to move the balance created in the accumulated depreciation account to the gain/loss account. Please refer to the detailed examples that follow.