Hi,
I have an exam in a coupel of days and need help!
Could someone please give me the journal entry for the sale of a Non - Current Asset. A hyperthetical example would be greatly appreciated.

Thank you

Quote:

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Originally Posted by Susan7

Hi,
I have an exam in a coupel of days and need help!
Could someone please give me the journal entry for the sale of a Non - Current Asset. A hyperthetical example would eb greatly appreciated.

Thankyou

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Selling land...
Cash xxx
Land xxx
OR
Accounts receivable xxx
Land xxx

Selling equipment...
Cash xxx
Equipment xxx
OR
Accounts receivable xxx
Equipment xxx

Any of these are examples of sales of non current assets

Example. In 1999, you bought a building for 100,000 and the land for 50,000. You will amortize the building over 20 years, using straight line amortization. Therefore, 5,000 per year (assume no salvage value). So Year 1, Amort is 2,500, Years 2, etc. 5,000

Now, in 2007 you plan to sell the building and land for 500,000 and 75,000 respectively.


The Journal Entries would be:

In 1999 when you bought it:
Dr. Building 100,000
Dr. Land 50,000
Cr. Cash 150,000

In 2007, when you sell it:
Dr. Cash 575,000 (500,000 + 75,000)
Dr. Accumulated Amortization on Building 40,000 (5,000 for 99 and 07; Years 00-06 5,000x7)
Cr. Building 100,000
Cr. Land 50,000
Cr. Gain on sale 465,000 (plug)