Asset Disposal
Depreciation
= Imputed expense
Type 1: Fixed instalment
𝑝𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑚𝑜𝑛𝑡ℎ𝑠
Cost price x x
100 12
Type 2: Diminishing balance
𝑝𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑚𝑜𝑛𝑡ℎ𝑠
(Cost price – accumulated depreciation) x x
100 12
An asset cannot depreciate to 0.
Must be the value of at least R1 to show that you still own it.
Accumulated depreciation
= Negative asset
Why a business would sell fixed assets:
- It has become obsolete
- It has reached the end of its useful life
, General ledger account balances:
+ Accumulated depreciation -
Date Date Balance b/d Value
+ Depreciation -
Date Balance b/d Value
+ Asset (Vehicles or equipment) -
Date Balance b/d Value
When dealing with fixed assets:
1. Disposal: Asset that you are disposing
- Accumulated depreciation from date of purchase to start of year.
- Depreciation from the start of the year to dale.
2. Old: Assets that you are keeping
= Current year’s depreciation
3. New: Assets that you bought
= Current year’s depreciation
Depreciation
= Imputed expense
Type 1: Fixed instalment
𝑝𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑚𝑜𝑛𝑡ℎ𝑠
Cost price x x
100 12
Type 2: Diminishing balance
𝑝𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑚𝑜𝑛𝑡ℎ𝑠
(Cost price – accumulated depreciation) x x
100 12
An asset cannot depreciate to 0.
Must be the value of at least R1 to show that you still own it.
Accumulated depreciation
= Negative asset
Why a business would sell fixed assets:
- It has become obsolete
- It has reached the end of its useful life
, General ledger account balances:
+ Accumulated depreciation -
Date Date Balance b/d Value
+ Depreciation -
Date Balance b/d Value
+ Asset (Vehicles or equipment) -
Date Balance b/d Value
When dealing with fixed assets:
1. Disposal: Asset that you are disposing
- Accumulated depreciation from date of purchase to start of year.
- Depreciation from the start of the year to dale.
2. Old: Assets that you are keeping
= Current year’s depreciation
3. New: Assets that you bought
= Current year’s depreciation
