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


Journal Entry for Profit on Sale of Fixed Assets

Nowadays, businesses sell their assets as a part of strategic decision-making. Reasons could vary from upgradation to a 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 very common that an asset may not be sold at a current book value, hence if it is sold for more than its written down value it generates profit for the business and in a situation opposite to that i.e. when it is sold for less it incurs a loss.

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

 There are 3 different accounts that will be affected in this case;

  1. Asset being sold
  2. Cash being received
  3. Profit earned on sale of asset

 

Journal Entry for Profit on Sale of Fixed Assets

Cash A/C Debit Real Account Debit what comes in
To Sale of Asset Credit Real Account Credit what goes out
To Profit on Sale of Asset Credit Nominal Account Credit all gains

 

>Read Journal Entry for Loss on Sale of Fixed Assets



 

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