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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 strategic decision-making. Reasons could vary from up-gradation 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 the business and, in the situation opposite to that, it incurs a loss when it is sold for less.

Journal entry for loss on sale of fixed assets is shown on the debit side of profit and loss account.

There are 3 different accounts that will be affected by this

  1. The asset being sold
  2. The cash being received
  3. A loss incurred on the 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

 

>Read Journal Entry for Profit on Sale of Fixed Assets