How to: - Record the money received from the sale of an asset
- Record the profit or loss made from the sale of an asset
- Remove the value of an asset from your balance sheet
- Write off an asset and record any loss
At some time, you'll decide that you no longer need an asset, or that you need to replace it. When this happens, there are two things you can do: - Sell your assets and record the money that you've received
- If an asset becomes obsolete or has no value and unsellable, write it off. Consult your accountant if uncertain
Remove the asset from your balance sheet and record the sale's profit/loss on your profit and loss statement. Sell an assetIf 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 in your accounts, you - Remove asset value and accumulated depreciation from balance sheet; transfer to profit and loss via journal
- Record the money you've received from selling the asset using an Other Receipt.
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. - 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.
To transfer the original purchase price from Asset to Sale of Assets ledger, 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. 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 as a balance of £-2,000. 
Once you receive the money from your sale, record it as an Other Receipt.Make sure you select the Sale of Assets (4200) ledger account. Selling an asset for £3,000 credits £1,000 in Sale of Assets, shown as sales on the Profit and Loss. 
Do I charge VAT on the sale? This is a complex area and we strongly advise you to check with your Accountant. - VAT is due on the sales of assets by VAT-registered businesses
- Second-hand assets purchased without VAT typically don't attract VAT charges on the original purchase
Other differences and exceptions may apply depending on the asset type, such as cars and property sales. If using the Flat Rate Scheme for VAT, record any VAT from asset sales as Outside of Flat Rate. This rule applies if you processed the initial VAT on the asset purchase (exceeding £2000) outside of the Flat Rate. Set up an Asset ledger before recording the Sale of the Asset to process outside the Flat Rate. Swap the 4200 ledger with the new one. Check "Outside of Flat Rate" for Other Receipts. Debit your new Asset ledger and Credit the 4200 nominal with the net sales value via a manual journal. Write off an assetRecord the write-off for a asset in your accounts: - 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 a car valued at £10,000 depreciates to £2,000 and becomes unsellable, then it's written off. To do this, create a journal to remove the value from the relevant Accumulated Depreciation ledger account on the balance sheet and add it to the relevant Depreciation ledger account on your profit and loss. - 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 that 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.
To remove the full value of the car (£10,000) as an asset and as depreciated from your balance sheet, enter another opposite journal. This will tidy up your accounts so these values no longer show: | Ledger Account | Details | Debit | Credit | Include on VAT Return? | | Motor Vehicles – Cost (0050) | Motor vehicles write off |
| 10,000.00 | No | | Motor Vehicles Depreciation (0051) | Motor vehicles write off | 10,000.00 |
| No |
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