Summary Templates for LU3 and Lu4 for accounting 1B

DEBIT CREDIT
General journal -DEPRECIATION

REMOVE COST OF ASSET SOLD-TRANSFER TO ASSET
DISPOSAL
ASSET DISPOSAL XX

ASSET(MACHINE,VEHICLE,FURNITURE,LAPTOP) XX

-(TRANSFERING COST TO ASSETS DISPOSAL)
REMOVE ACCUMULATED DEPRECIATION OF ASSET SOLD-
TRANSFER TO ASSET DISPOSAL

ACCUMULATED DEPRECIATION XXX
ASSET DISPOSAL XXX

(TRANSFERING ACC DEP TO ASSETS DISPOSAL)

RECOGNISE THE SELLING PRICE BY TRANSFERING TO ASSET
DISPOSAL

BANK/TRADE IN CREDITORS/DEBTORS
ASSET DISPOSAL
(RECOGNISING ASSET DISPOSAL)

CALCULATE THE PROFIT AND LOSS BY TRANSFERRING TO
ASSET DISPOSAL
IF ITS IS LOSS(EXPENSE)
DR LOSS
CR ASSET DISPOSAL
IF IT IS PROFIT(INCOME)
DR ASSET DISPOSAL
CRPROFIT
(RECOGNISING PROFIT/LOSS)
Depreciation(new) without sold asset
Accumulated depreciation
(new depreciation calculated after taking out sold asset)
Depreciation (new bought asset)
Accumulated depreciation
(depreciation for the new asset bought)
EQUIPMENT
BANK
New asset bought in cash or credit e.g equipment
IMPORTANT:COST WILL ALWAYS BE THE PRICE THAT THE COMPANY BOUGHT THE ASSET AT

1.ASSET DISPOSAL

very important:sometimes you have to calculate the acc depreciation of the asset you selling -which means you
will calculate depreciation for all of the years and add it to make it accumulated depreciation(calculate
depreciation from the time the asset was bought until we sold it)

make sure you proportinate your months properly if asset was bought during the year and sold during the year.

How to calculate new depreciation

2.NEW DEPRECIATION/DEPRECIATION OF ALL ASSETS REMAINING IN THE BUSSINESS

-STRAIGHT LINE/COST /FIXED METHOD:

Step 1:Take the cost of all assets e.g Equipments subtract sold equipment cost

Step 2:multiply by rate and is always a year(12/12) that will be your new depreciation/depreciation for assets
remaining in bussiness

-STRAIGHT LINE/COST/FIXED METHOD: If there was a new asset e.g bought new equipment then take and
multiply by rate and if bought during the year proportionate e.g 3/12 if bought start of the year then is 12/12

-REDUCING/DIMINISHING METHOD:New depreciation after selling asset

Step 1: Take the cost of all assets e.g Equipments subtract sold equipment cost

Step 2: Take accumulated depreciation of all assets e.g equipments subtract the accumulated depreciation of
sold equipment

, Step 3:Step 1- step 2=Carrying Value of all assets remaining in the business

Step 4(new depreciation of remaining assets):Carrying value (step 3) multiply by rate multiply by 12/12 is
always 12 months-year

REDUCING/DIMINISHING METHOD:

Step 1:If there was a new asset e.g bought new equipment then take and

Step 2: multiply by rate and if bought during the year proportionate e.g 3/12 if bought start of the year then is
12/12

(the depreciation for new asset, will be the same method as straight line because we don’t have depreciation to
subtract from previous years since well is new)

GENERAL LEDGERS

STEP 1:Remove costs-transfer it to asset disposal

-Asset (equipment,vehicle,etc)

BALANCE B/F-If theres opening cost to the asset ASSET DISPOSAL-Cost of asset sold(original cost
e.g equipment xx business bought the asset for) XX
BANK (in cash)/DEBTORS(on credit)-New Balance b/d xx
equipment bought xx



STEP 2:Remove accumulated depreciation-transfer it to asset disposal

-Accumulated depreciation

Asset disposal(accumulated depreciation Balance b/d (opening balance for deprecition of all
calculated for all the years of the asset we selling) equipments e.g equipment)
xx
Balance c/d Depreciation(for remaining assets)
Depreciation(for new assets)


STEP 3: Recognise the selling price-transfer to asset disposal

-BANK/DEBTORS/LOAN TRADE IN(CREDITORS)

Asset disposal



STEP 4:Record the profit or loss on asset sold

Loss on sale(if loss was made) Profit(if profit was made)


ASSET DISPOSAL MUST INCLUDE ALL ACCOUNTS THAT TRASFFERED TO IT

Asset:Equipment Accumulated depreciation:equipment sold
Profit on sale Bank/debtors/loan for trade in(creditors)
Loss on sale



DEPRECIATION(NEW DEPRECIATION)

Accumulated depreciation (new depreciation) Profit and loss xxx
xxx
Accumulated depreciation(e.g bought asset-new Profit and loss xxx
equipment) xxx


How to calculate new depreciation

2.NEW DEPRECIATION/DEPRECIATION OF ALL ASSETS REMAINING IN THE BUSSINESS

-STRAIGHT LINE/COST /FIXED METHOD: