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Gain/Loss on Asset Disposals: Another Template!

It's likely that you dispose of assets every year. Waiting until year end to adjust the gain-loss on disposals could skew your financials significantly.

So why wait?! Act now and download the template!

PP&E Gain-Loss Template
Download XLSX • 15KB

The spreadsheet is broken down into three parts:

Note: Debits are represented as positive numbers and credits are represented as negative numbers.

1) Asset Information:

Here, you will input data associated with the asset disposed of, such as the description, category (drop-down list provided), historical cost, accumulated depreciation at time of sale, and either cash or trade-in proceeds. The formula will take care of the rest.

In our example below, we're disposing of a 2015 Ford F-150. With total cash proceeds of $10,000 and a net book value of $3,000, we have a total gain of $7,000.

2) Receipt of Proceeds:

This section covers the entries to record the proceeds and disposal of the vehicle. I have separated these entries out for illustration purposes, although you are not required to do so. The journal entries should auto-populate.

a) Record all proceeds to the (Gain)/Loss on Disposals account.

b) Record entry to remove asset cost and accumulated depreciation, with an

adjustment to (Gain)/Loss on Disposals to reflect the total gain of $7,000.

c) There's a good ole fashioned T-Account for the gain and loss that shows you the

impact of your entries on the (Gain)/Loss on Disposals account.

3) Note: (Gain)/Loss on Trade-Ins

So you traded in your old truck for a new one. Although you didn't see the cash for the allowance, you still technically received proceeds. This will trigger an entry to record a (Gain)/Loss on the trade in.

In our example below, we trade in a vehicle with a historical cost of $25,000 and accumulated depreciation of $22,000 at the time of the trade in. The dealership gave us a $7,000 trade in allowance when we purchased a new vehicle for $20,000. Since the dealership gave us more money than the net book value, we have a gain, $4,000. You'll notice that the total cost of the vehicle includes the trade in amount and the difference that was financed or paid in cash.

It's always a great idea to have a second pair of eyes review your work, so please have your calculations and entries checked before posting them.

As always, feel free to reach out with any questions. Thanks!

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