Disposals
Record asset disposals, calculate gains and losses, and see the exact journal posted for every scenario.
When an asset leaves the business — sold, scrapped, donated, stolen, or written off — it must be removed from the balance sheet. A disposal does three things: it removes the original cost from the asset account, clears the accumulated depreciation, and recognizes any resulting gain or loss. The system computes the net book value from the depreciation already posted and books the difference against the disposal amount.
Recording a Disposal
Navigate to: Operations → Fixed Assets → Disposals tab → New
The Disposals tab lists every disposal (Name, Description, Mode, Status) with search, a filter sheet, Export and Columns. New opens the disposal form.
Disposal Fields
| Field | Required? | Details |
|---|---|---|
| Asset | Yes | The asset leaving the business, picked from the register. |
| Disposal Amount | Yes | The proceeds received from selling the asset. Enter zero for assets that are scrapped, donated, or written off with no consideration received. |
| Disposal Date | Yes | The date the asset was sold, handed over, scrapped, or removed. This is the disposal journal's business date and decides which accounting period the gain or loss posts to. |
Depreciation Before Disposal
The disposal uses the accumulated depreciation already posted for the asset. It does not post a partial-period charge up to the disposal date. If the current period should be charged before the asset leaves, click Run catch-up on the Fixed Assets page first, then record the disposal.
Disposal Scenarios
All three scenarios post to the three accounts configured on the asset: the Asset Account, the Accumulated Depreciation Account, and the Depreciation Expense Account. The disposal form has no proceeds, gain or loss account fields — proceeds, gain and loss all post to the asset's Depreciation Expense account.
Scenario 1 — Disposal at Book Value (no gain or loss)
Asset: Cost 15,000.00. Accumulated Depreciation 9,000.00. Net Book Value 6,000.00. Sold for exactly 6,000.00.
| Account | Debit | Credit | Description |
|---|---|---|---|
| Depreciation Expense (asset) — disposal proceeds | 6,000.00 | — | Proceeds received from buyer |
| Accumulated Depreciation (asset) | 9,000.00 | — | Accumulated depreciation cleared from the contra-asset account |
| Asset Account (asset) | — | 15,000.00 | Original cost removed from the balance sheet |
Result: The asset disappears from the balance sheet. The proceeds sit in the Depreciation Expense account until you move them to the bank with a manual journal.
Scenario 2 — Disposal at a Gain (sold for more than NBV)
Asset: Cost 15,000.00. Accumulated Depreciation 9,000.00. NBV 6,000.00. Sold for 8,500.00.
Gain = 8,500.00 − 6,000.00 = 2,500.00.
| Account | Debit | Credit | Description |
|---|---|---|---|
| Depreciation Expense (asset) — disposal proceeds | 8,500.00 | — | Proceeds received from buyer |
| Accumulated Depreciation (asset) | 9,000.00 | — | Accumulated depreciation cleared |
| Asset Account (asset) | — | 15,000.00 | Original cost removed from balance sheet |
| Depreciation Expense (asset) — gain on disposal | — | 2,500.00 | Surplus above book value |
Result: The asset is removed. The 2,500.00 gain reduces the Depreciation Expense account in the period of disposal.
Scenario 3 — Disposal at a Loss (sold below NBV or scrapped)
Asset: Cost 15,000.00. Accumulated Depreciation 9,000.00. NBV 6,000.00. Sold for 1,500.00 (or scrapped for 0).
Loss = 6,000.00 − 1,500.00 = 4,500.00 (or 6,000.00 if scrapped).
| Account | Debit | Credit | Description |
|---|---|---|---|
| Depreciation Expense (asset) — disposal proceeds | 1,500.00 | — | Proceeds received (no line when scrapped for zero) |
| Accumulated Depreciation (asset) | 9,000.00 | — | Accumulated depreciation cleared |
| Depreciation Expense (asset) — loss on disposal | 4,500.00 | — | Shortfall below book value |
| Asset Account (asset) | — | 15,000.00 | Original cost removed from balance sheet |
Result: The asset is removed. The 4,500.00 loss increases the Depreciation Expense account in the period of disposal.
After Disposal
- The asset's Auto-Charge status changes to Disposed and no further depreciation is posted
- The asset stays on the Registers tab (it is never deleted) and the disposal appears on the Disposals tab
- The journal, referenced DISP-YYYYMMDD, is available for review in the Finance ledger
The gain or loss from a disposal posts to the period containing the Disposal Date — not the date you enter the record in the system. If you are recording a disposal that occurred in a closed period, you may need to reopen that period first. Entering the wrong disposal date can misstate the income for both periods affected.
Showing the Proceeds in the Bank
Because the proceeds are debited to the asset's Depreciation Expense account, post a manual journal in Finance for the amount received — debit the bank or receivable account, credit that Depreciation Expense account — so the cash shows where it landed and the expense account carries only the net gain or loss.