What is the Journal Entry for Loss on Sale of Fixed Assets?

Journal Entry for Loss on Sale of Fixed Assets

Nowadays, businesses sell their assets as a part of a strategic decision-making. Reasons could vary from upgradation to new better quality asset, arranging money for a business need, not in use asset etc. there could be any reason to sell an asset.

It is common that an asset may not be sold at its current book value, if it is sold for more, it generates profit for business and, in the situation opposite to that, it incurs a loss when it is sold for less.

 

Loss or profit on the sale of an asset is to be shown on the appropriate side in the profit and loss account.

 

There are 3 different accounts that will be affected in this

  1. The asset being sold
  2. The cash being received
  3. Loss incurred on sale of an asset

 

Journal Entry for Loss on Sale of Fixed Assets

 Cash A/C  Debit  Real Account  Debit what comes in
 Loss on sale of asset  Debit  Nominal Account  Debit all losses 
   To Sale of Asset  Credit  Real Account  Credit what goes out