NetAsset - Asset Disposals
Use Case: Circumstances may require the disposal of an asset before or after it’s been fully depreciated. In these instances, a disposal entry is required to remove the asset (and accumulated depreciation), settling any cash paid or received with an offset to the gain/loss account.
STEP BY STEP PROCESS
- Navigate to the NetAsset record to be disposed. An example asset record to be disposed of is shown below:
- Click Dispose and confirm your intent to navigate to the Dispose Assets page.
- Update the fields as necessary for the asset disposal:
- Disposal Fields:
| Field | Description | Example |
Disposal Date | The date of the disposal will default in based on the disposal convention. If Zero Depreciation is selected it will default to the first day of the month, Half Depreciation will default to the middle of the month, Full Depreciation will default to the last day of the month. Prorated will allow you to edit the disposal date to whatever date you choose and will then prorate the amount of depreciation taken for the number of days the asset was in-service for that month prior to the disposal. | 09/01/2023 |
| Disposal Time of Day | This field will become editable if a prorated disposal convention is selected. Beginning of Day will result in the disposal taking place prior to any depreciation being booked for that day. End of Day will add an additional days worth of depreciation, then process the disposal. | Beginning of Day |
| Disposal Quantity | Enter the quantity of the asset to dispose of. Updating this field indicates a partial disposal. Refer to Partial Disposal. | 1 |
| Disposal Amount - Gross | Enter the gross value of the asset or part of the asset to dispose of. Updating this field indicates a partial disposal. Refer to Partial Disposal. | 30,000.00 |
| Disposal Amount - Accumulated Depreciation | The accumulated deprecation balance being diminished as part of the disposal. | 26,000.00 |
| Disposal Amount - Net | The net book value of the quantity of the asset being disposed. | 4,000.00 |
| Cash Received to Dispose Asset | Input the amount to be received from the disposal. | 1,000.00 |
| Cash Paid to Dispose Asset | Input the amount to be paid in the asset disposal month. | 0.00 |
| Profit & Loss | The profit or loss to be had on disposal of the asset. | -3,000.00 |
Disposal Reason | Provide a brief description of the reason for the disposal. Your administrator may need to configure this list by creating NetAsset Disposal Reason records. | Trade in |
Disposal Note | Provide any additional description or details for the disposal. | Trading in for new pallet truck |
| Disposal Convention | The method used to calculate depreciation for the asset during the period of disposal. Full Depreciation: Depreciation is calculated for the full period when the asset is disposed. Half Depreciation: Depreciation is calculated for half the period when the asset is disposed. Zero Depreciation: No depreciation is recorded in the period prior to the disposal. Prorated Depreciation: The amount of depreciation in the period of disposal is pro-rated based on the number of days the asset is active during the interval. | Full Depreciation |
| Gain/Loss Account | Optionally override the default Gain/Loss account for the Asset Type which will be impacted with the asset’s current Net Balance minus Cash Received plus Cash Paid | 8040 Gain (loss) on Sale of Assets |
| Receivable/Payable Clearing Account | Optionally override the default Receivable/Payable Clearing account for the Asset Type which will be impacted with the Cash Received minus the Cash Paid | 1200 Sale of Assets Receivable/Payable Clearing |
| Invoice Date | If creating an invoice, enter the date the invoice should post | 9/30/2023 |
| Customer | Option to select the customer to be invoiced for the asset being disposed of | Test Customer |
| Item | Option to enter the item to display on the invoice to the customer | ALE00001 |
| Price Level | Option to enter the price level to sell the disposed item at | List Price |
| Sales Order | Option to enter the sales order to invoice from |
- After double-checking inputs for the asset disposal, click Dispose. A banner will appear that says "The job has been scheduled. Please refresh periodically to see updated status". Periodically click on the Refresh button until this banner disappears.
- Once the disposal is complete and you’ll see the NetAsset Disposal Entry and removal of all subsequent depreciation schedule lines.
- If anything other than Zero Depreciation was selected as the disposal convention, an additional line of depreciation will be booked prior to the disposal line.
- Click on the hyperlink to the NetAsset Disposal Entry and note that the journal entry reverses all cumulative balances in Fixed Assets (Gross) and Accumulated Depreciation accounts with the offset to Sale of Assets Receivables and the Gain/Loss account divided up based on the cash paid/received.
- Debit Asset Type’s Accumulated Depreciation Account for the asset’s current Accumulated Depreciation
- Credit Asset Type’s Fixed Asset Account for the asset’s current Gross Asset Value
- Debit Asset Type’s Sale of Assets Receivable/Payable Account for the Cash Received minus the Cash Paid
- Debit Asset Type’s Gain/Loss on Sale of Assets Account for the asset’s current Net Balance minus Cash Received plus Cash Paid