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Tinac1981 said:
“
I have a sole trader who has scrapped a fully depreciated van and I can cant think how to treat it in the accounts. Does the income need to be declared? is it taxed? They were sold for far less than it was brought.
Thanks
Tina
”
Hi Tina,
You should have a Van-Asset Account and depreciation account (Or Motor Vehicle Depreciation) in your balance sheet.
Say your client bought a van for £1000 and kept it for the depreciable period.
Detail Dr Cr
------- ------ --------
Van A/c [As an Asset] 1000.00
Van Depreciation £1000.00
you can credit van a/c and debit Van Disposal A/c in P&L and
debit Van Depreciation a/c and credit to Van Dispose A/c.
Whatever realization have your client for a depreciated van you can debit cash/Bank A/c and credit Van Disposal A/c.
So that is how it will work in journal entries:
Detail Dr Cr
------- ------ --------
Van A/c [As an Asset] 1000.00
Van Disposal A/c [P&L item] 1000.00
Van Depreciation 1000.00
Van Disposal A/c [P&L item] 1000.00
Cash A/c [say realized 100] 100.00
Van Disposal A/c 100.00
That is how you will get your client's P&L credited by £100.00, which you can treat as other income.
Hope this will find you helpful.
Thank you.
Kaushik
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