I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

current assets account. 

(a) 

The profit or loss on disposal is the difference between: 

(i) 

The sale price of the asset (if any); and 

(ii) 

The carrying amount of the asset at the time of sale. 

(b) 

The following items must appear in the disposal of non-current assets account.  

(i) 

The value of the asset (at cost, or revalued amount*) 

(ii) 

The accumulated depreciation up to the date of sale 

(iii) 

The sale price of the asset 

* To simplify the explanation of the rules, we will assume now that the non-current assets 

disposed of are valued at cost. 

(c) 

The ledger accounting entries are as follows. 

(i) 

DEBIT 

Disposal of non-current asset account 

CREDIT 

Non-current asset account 

 

with the cost of the asset disposed of. 

(ii) DEBIT 

Accumulated 

depreciation 

account 

CREDIT 

Disposal of non-current asset account 

 with the accumulated depreciation on the asset as at the date of sale. 

(iii) 

DEBIT 

Receivable account or cash book 

CREDIT 

Disposal of non-current asset account 

with the sale price of the asset.  

The sale is therefore not recorded in a sales account, but in the disposal of non-current asset 

account itself. You will notice that the effect of these entries is to remove the asset, and its 

accumulated depreciation, from the statement of financial position. 

The balance on the disposal account is the profit or loss on disposal and the corresponding 

double entry is recorded in the profit or loss account. 

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