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    ann5025's Avatar
    ann5025 Posts: 2, Reputation: 1
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    #1

    May 22, 2009, 01:37 PM
    Booking the sale of depreciated inventory item
    How would I book this transaction:

    Sold an Inventory asset that has fully depreciated. Received cash

    But I need to get the asset off the books as well

    Received Cash: DR Cash
    Income from Sales: CR Inventory Sales Income

    COS:
    Cost of sales from inventory(Original Cost Basis): CR Inventory
    Depreciation: DR Accumulated Depreciation

    And if not fully depreciated the difference is booked to Gain/Loss from the sale of an asset.

    Is this correct?
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #2

    May 24, 2009, 12:53 AM

    Could you please explain what an "inventory asset" that is being charged off to COGS and is being depreciated. Doesn't work that way.

    Inventory is something for resale and you don't depreciate it. If it's a depreciable asset (used in the company and not for re-sale), then you don't use COGS.

    Can you please tell us what this asset is first?
    ann5025's Avatar
    ann5025 Posts: 2, Reputation: 1
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    #3

    Jun 3, 2009, 02:34 PM
    Quote Originally Posted by morgaine300 View Post
    Could you please explain what an "inventory asset" that is being charged off to COGS and is being depreciated. Doesn't work that way.

    Inventory is something for resale and you don't depreciate it. If it's a depreciable asset (used in the company and not for re-sale), then you don't use COGS.

    Can you please tell us what this asset is first?

    Sorry,

    I actually had two questions.

    1)Sale of an inventory asset

    Dr-Cash Cr- Inventory Sales income
    Cr- Inventory Dr- COS Inventory


    2) Sale of an asset that is depreciated

    Dr - Cash ($$ Received) Cr-Asset Account (value of asset)
    Cr- A/D for this specific asset Dr/Cr -Balance to Gain/Loss on Sale of an asset.
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #4

    Jun 4, 2009, 12:42 AM
    Quote Originally Posted by ann5025 View Post
    Sorry,

    I actually had two questions.

    1)Sale of an inventory asset

    Dr-Cash Cr- Inventory Sales income
    Cr- Inventory Dr- COS Inventory


    2) Sale of an asset that is depreciated

    Dr - Cash ($$ Received) Cr-Asset Account (value of asset)
    Cr- A/D for this specific asset Dr/Cr -Balance to Gain/Loss on Sale of an asset.
    It's mostly correct. The A/D is already a credit so you need to debit it. You must reverse out both the asset and its depreciation.

    The first time around you said the asset was fully depreciated. If that's the case, it has zero book value and it must be a gain. (If that wasn't correct, then it can be a gain or loss.)

    Everything else here is correct.
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