How to dispose of a fixed asset

NOTE: If you're disposing of an asset and still have an HP loan outstanding, please follow the Record sale using manual journals section below. If you're using a flat rate VAT scheme, for help disposing of an asset, please refer to our Flat Rate VAT asset disposal article.

The asset disposal wizard in Sage 50 Accounts Professional guides you through entering the figures to show the disposal of a fixed asset in the nominal ledger, and deletes the asset from the fixed assets register.

1. On the menu bar click Modules, click Fixed assets then click Disposal.
2. Complete the boxes as follows:
   

   Fixed asset to be disposed	Choose the asset you want to dispose of.
   Posting date	Enter the date of the disposal.
   Department	If required, enter a department.
   Original purchase nominal code	Select the nominal code that the asset was originally entered against in the nominal ledger.
   Original purchase tax code	The tax code defaults to T1. If required, you can change this. We can't advise you what tax code to use.
   Sales of assets nominal code	Enter the Sale of Assets nominal code.
   Bank account	If You're selling the asset, select the bank account that the money is to be paid in to.
   Gross sale value	Enter the gross value, including VAT, for the disposal of the asset. This is the total amount that you received for the fixed asset.
   VAT on sale	This value calculates automatically.
   Net sale value	This value calculates automatically.

3. Click Next, then click Post.
   
   The journal posts and the fixed assets record is deleted.

 NOTE: If you're using a flat rate VAT scheme, for help disposing of an asset, please refer to our Flat Rate VAT asset disposal article. If you're writing off an asset, please refer to our manual write off article.

These steps are based on the following example:

• A vehicle which was originally purchased for £/€10,000.
• Depreciation to date is £/€7,500.
• The asset is sold for £/€500.

1. On the navigation bar click Nominal codes then click Journal entry.
2. Enter a reference, date and the journal details to record the disposal of the fixed asset.
   
   For example, to transfer the original purchase price from the asset nominal code, post the following:
   

   N/C	Name	Details	T/C	Debit	Credit
   0050	Motor Vehicle	Disposal	T9		10,000.00
   4200	Sales of Assets	Disposal	T9	10,000.00

   To transfer the accumulated depreciation to date, post the following:

   N/C	Name	Details	T/C	Debit	Credit
   0051	Motor Vehicle Depreciation	Disposal	T9	7,500.00
   4200	Sales of Assets	Disposal	T9		7,500.00

   To record the proceeds from the sale, post the following:

   N/C	Name	Details	T/C	Debit	Credit
   1200	Bank Current Account	Disposal	T9	500.00
   4200	Sales of Assets	Disposal	T9		500.00

   If you're disposing of an asset and still have an HP loan outstanding, instead of posting the proceeds of the sale to your bank you should post it to the HP loan nominal code, for example 2310. If you're unsure, please contact your accountant for guidance.
   
   
3. Click Save then click Close.
4. If required, manually delete the asset record.

You've now posted the journal entries to record the disposal of the asset. As a result of these journals the balance on the Sales of Assets nominal code is a £/€2,000 debit. This appears as a loss on the profit and loss report.