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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. Sale of an asset may be done to retire an asset, funds generation, etc. Such a sale may result in a profit or loss for the business. In the case of profits, a journal entry for profit on sale of fixed assets is booked.

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 the sale of an asset is to be shown on the appropriate side of the 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 the sale of an 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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