How to do accounting for scrapped equipment?
Because end-of-life equipment is no longer of value, the disposal income, less the book value and related taxes, should be recognized as non-operating income and expenditure. The accounting entries are:
(1) When fixed assets are transferred to liquidation, the specific accounting treatment is as follows:
Borrow: Fixed Assets Liquidation
Accumulated Depreciation
Provision for Impairment of Fixed Assets
Loan: Fixed Assets
(2) When the liquidation process incurred the costs and the tax payable, the specific accounting treatment is as follows:
Borrow: Fixed Assets Liquidation
Loan: Taxes Payable
Bank Deposits/Cash on Hand
(3) When the liquidation recovers the income, the specific accounting treatment is as follows:
Borrow: Bank Deposits
Loan: Fixed Assets Liquidation
(4) If the balance of Fixed Assets Liquidation is on debit, then it will be transferred to Non-Operating Expenditures. If the balance is on the credit side, it is transferred to non-operating income.
Fixed asset liquidation is due to wear and tear, suffered extraordinary disasters and accidents and the loss of production capacity, or because of the old and outdated, must be eliminated to update the fixed assets, the appraisal of the process, scrapping, write-off of assets, deal with the residual value of the work of the general term.
"Fixed assets clearance" is an asset account, used to account for the sale of enterprises, scrap and destruction of fixed assets transferred to liquidation of the value of fixed assets and in the process of liquidation of liquidation costs and liquidation income. Debit register fixed assets transferred to clean up the net value and clean up costs incurred in the process; credit register the sale of fixed assets to obtain the price, the value of salvage materials and the realization of income. The debit balance represents the net loss after liquidation; the credit balance represents the net gain after liquidation. After the liquidation of the net gain according to the assets have no value to the "non-operating income" or "gain or loss on disposal of assets" account; net loss to the "non-operating expenditures" account or The net loss is transferred to "non-operating expenses" account or "gain or loss on disposal of assets" account.
Accounting entries for depreciation of equipment
Borrow: Manufacturing overhead
Administrative expenses
Expenses of goods sold
Loan: Accumulated depreciation