Sell or write off an asset

As you no longer have the asset, you'll need to remove its value from your balance sheet. The cost of any write off or any profit or loss you make from a sale is recorded on your profit and loss.

If an asset still has some value and you decide to sell it, you must record this in your accounts as well.

To record the sales of your in your accounts, you

Remove the original value of the asset and it's accumulated deprecation from your balance sheet, and transfer the value to your profit and loss using a Journal.
Record the money you've received from selling the asset using Money In.

For example, you bought a car for £10,000. Over time it has depreciated in value by £8,000 and is now worth £2,000. However, you get a good deal, and manage to sell it on for £3,000, giving you a £1,000 profit.

Transfer the original purchase price

From Adjustments and Journals then New Journal.
Enter a Reference and Date.
For the Description enter any additional details about the journal.
Enter the relevant information to record the sale of the asset.

For example, to transfer the original purchase price from the Asset ledger account to the Sale of Assets ledger account, enter the following details:

Ledger Account Details Debit Credit Include on VAT Return?

Motor Vehicles – Cost (0050) Asset disposal 10,000.00 No

Sale of Asset (4200) Asset disposal 10,000.00 No

In our example, the Sales of Assets ledger account now has a balance of £10,000.

Transfer the accumulated depreciation

Add the following lines to the journal or create another journal with the following details:

Ledger Account	Details	Debit	Credit	Include on VAT Return?
Motor Vehicles Depreciation (0051)	Asset disposal	8,000.00		Leave clear
Sale of Asset (4200)	Asset disposal		8,000.00	Leave clear

In our example, the Sale of Assets ledger account now has a balance of £-2,000.

Record the sale of the asset

Once you receive the money from your sale, record it as a Money In transaction.

Make sure you select the Sale of Assets (4200) ledger account.

In our example, as the asset has been sold for £3,000, the balance on the Sale of Assets ledger account is now a credit of £1,000. This appears as a Sales on the Profit and Loss Report.

Do I charge VAT on the sale?

This is a complex area and we strongly advise you to check with your Accountant.

VAT is usually due on the sales of assets by VAT registered businesses.
There is usually no VAT charged for assets that were bought second hand where no VAT was charged on the original purchase.

There may be other differences and exceptions depending on the type of assets, such as sale of cars and property.

If you use the Flat Rate Scheme for VAT, then any VAT associated with the Sale of your Asset may need to be recorded as Outside of Flat Rate.

This would only be applicable when the initial VAT at time of Purchase of your Asset was also processed as being Outside of Flat Rate (Value of purchase exceeding £2000).

To allow this processing Outside of Flat Rate you would need to set up an Asset ledger in your Chart of Accounts prior to recording your Sale of the Asset.

This new ledger would be used in place of the 4200 ledger detailed in the Record the Sale of the Asset step above. Upon recording your Other Receipt, you will now have the option to tick the Outside of Flat Rate option.

Once your sale has been recorded you would need to post a manual Journal entry to Debit your new Asset ledger by the net sales value and Credit the 4200 nominal with this same amount.

Write off an asset

To record the write off an asset in your accounts, you

Reduce the current value to zero on your balance sheet.
Add the write off amount to your depreciation costs on the profit and loss.

For example, if you bought a car worth £10,000 over time it has depreciated in value by £8,000, and is now worth just £2,000. No-one wants to buy your car, so you decide to write it off.

To do this, create a journal to remove the value from the relevant Accumulated Depreciation ledger Account on the balance sheet and add to the relevant Depreciation ledger account on your profit and loss.

Record the write off of an asset

From Adjustments and Journals then New Journal.
Enter a Reference and Date.
For the Description enter any additional details about the journal.

Enter the relevant information to record the write-off. For example, if the asset is a car which is now worth £2000, enter the following details:

Ledger Account	Details	Debit	Credit	Include on VAT Return?
Motor Vehicles Accumulated Depreciation (0051)	Motor vehicles write off		2,000.00	No
Motor Vehicles Depreciation (8010)	Motor vehicles write off	2,000.00		No

Click Save.

Your balance sheet now shows the full value of car (£10,000) as an asset and as depreciated. The net effect is zero, but if you want to tidy up your accounts so these values are no longer shown, enter another opposite journal: