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and tear, suffered extraordinary disasters and accidents and the loss of production capacity, or because of the old and outdated, must be eliminated to update the fixed assets, the appraisal of the appraisal, scrapping, write-off of assets, deal with the residual value of the work of the general term.
Fixed assets by the technical appraisal and economic assessment, confirmed that should be scrapped and transferred to the cleanup, that is, the fixed assets out of the production process, the original fixed capital investment is reduced, therefore, in the accounting on the original price of the assets to be written off and has been depreciated, and at the same time, reduce the fixed fund. In order to ensure the simple reproduction of fixed assets, its depreciation should be equal to the amount of depreciation. If a fixed asset is scrapped early and not fully depreciated, it should be fully depreciated in principle. However, if the fixed assets are scrapped in advance due to mismanagement of the enterprise, the depreciation will not be fully depreciated. Retirement of fixed assets directly to the original price of the fixed assets to be written off, write-off of fixed assets, according to its original price credit? Fixed Assets account, according to the accumulated depreciation debit? Depreciation? account.
Nomenclature
Fixed Assets Liquidation? is an asset class account used to account for the value of fixed assets transferred to liquidation by an enterprise for reasons such as sale, scrapping and destruction, as well as the liquidation costs and liquidation revenues incurred in the process of liquidation. Debit register fixed assets transferred to the net value of liquidation and liquidation 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 transfer? Non-operating income or? Gain or Loss on Disposal of Assets account; the net loss is transferred to? Non-operating Expenses account or the "Gain or Loss on Disposal of Assets" account. Gain or Loss on Disposal of Assets? account. Fixed assets liquidation? Account should be set up by the fixed assets being liquidated ledger.Accounting Procedures
(1) When selling, scrapping and destroying fixed assets transferred to liquidation,
Borrow: Fixed Assets Liquidation (Carrying Value of Fixed Assets Transferred to Liquidation)
Accumulated Depreciation (Depreciation Provided)
Accumulated Provision for Impairment of Fixed Assets (Provision for Impairment Provided) )
Credit: Fixed Assets (Original Book Value of Fixed Assets)
(2) When liquidation costs are incurred,
Borrow: Liquidation of Fixed Assets
Credit: Bank Deposit
(3) When recovering the price of the fixed assets sold, the value of salvage materials, and the proceeds from the realization of the value of the fixed assets,
Borrow: Bank Deposit
Raw Materials, etc.
Credit: Bank Deposit
Raw Materials, etc.
Credit: Bank Deposit
Raw Material
Credit: Fixed Assets Liquidation
(4) When compensation should be paid by the insurance company or the negligent person,
Borrow: Other receivables
Credit: Fixed Assets Liquidation
(5) Net proceeds from Fixed Assets Liquidation
Borrow: Fixed Assets Liquidation
Credit: Long-term amortized expenses (belonging to the period of preparatory work)
Gain or loss on disposal of assets (belonging to the period of production and operation)
(6) Net loss after liquidation of fixed assets,
Borrow: Long-term amortized expenses (belonging to the period of preparation)
Non-operating expenses - extraordinary loss (loss due to natural disasters and other unusual causes)
Non-operating Expenses - Losses on Disposal of Non-current Assets (Normal Scrapping)
Gain or Loss on Disposal of Assets (belonging to the production period)
Credit: Fixed Asset Cleanup
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