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Sale of Fixed Assets

When a fixed asset reaches the end of its useful life, you may choose to either scrap it or sell it after recording depreciation. TallyPrime allows you to seamlessly record both the depreciation and the sale of fixed assets.

During the sale, you may incur either a profit or a loss depending on the selling price:

• If the sale price exceeds the book value of the asset, the difference is recorded as profit.
• If the sale price is lower than the book value, the difference is recorded as loss.

To record the sale of fixed assets, follow these steps: 

1. Record purchase of fixed assets. 
2. Record Depreciation and Sale of fixed assets.
   1. In the Journal voucher, debit the depreciation ledger grouped under expenses, enter the value of depreciation and credit the fixed assets ledger.
      
   2. As always, press Ctrl+A to save the journal voucher.
   3. Record Sale of Fixed Assets in Accounting Invoice mode.
      1. In the sales voucher, enter the sales account for Furniture under Particulars.
      2. Select the appropriate GST ledgers based on the party’s Place of Supply.
         

This sale value appears in your trading account and Sales Register. As the sale is of a fixed asset, you need to transfer this amount to the fixed asset ledger to form part of the Balance Sheet.

Sale of fixed asset can be recorded in journal voucher, but you cannot generate the sales invoice.

1. View details in GST report.
   • Press Alt+G (Go To) > type or select GSTR-1 > and press Enter.
     Alternatively, Gateway of Tally > Display More Reports > GST Reports > GSTR-1.
     If the fixed asset is sold to:
     • Registered dealer, the details appear under B2B Invoices. 
     • Unregistered dealer, the details appear under B2C Invoices.
2. Account for profit or loss on sale of fixed assets.
   1. Account for profit on sale of fixed assets.
      

      Transfer the profit to the income ledger to reflect the balance sheet’s actual value of fixed assets.

      Example: After charging depreciation on fixed assets, if the net value of the fixed assets is 45,000 and the sale value is 55,000, record a Journal voucher to transfer the profit as given below.

      • Debit: Sale of Fixed assets = 55,000
      • Credit: Fixed Assets = 45,000
      • Credit: Indirect Income = 10,000
   2. Account for loss on sale of fixed assets.
      

      Transfer the loss to the expense ledger to reflect the balance sheet’s actual value of fixed assets.

      Example: After charging depreciation on fixed assets, if the net value of the fixed assets is 45,000 and the sale value is 35,000, record a Journal voucher to transfer the loss as given below.

      • Debit: Sale of Fixed assets = 35,000
      • Debit: Indirect Expenses = 10,000
      • Credit: Fixed Assets = 45,000