Journal Entry for Loss on Sale of Fixed Assets
Nowadays, businesses sell their assets as part of strategic decision-making. Reasons could vary from up-gradation to new better quality asset, arranging money for a business need, not in use asset etc. there could be any reason to sell an asset.
It is common that an asset may not be sold at its current book value if it is sold for more, it generates profit for the business and, in the situation opposite to that, it incurs a loss when it is sold for less.
Journal entry for loss on sale of fixed assets is shown on the debit side of profit and loss account.
There are 3 different accounts that will be affected by this
- The asset being sold
- The cash being received
- A loss incurred on the sale of an asset
Journal Entry for Loss on Sale of Fixed Assets
| Cash A/C | Debit | Real Account | Debit what comes in |
| Loss on sale of asset | Debit | Nominal Account | Debit all losses |
| To Sale of Asset | Credit | Real Account | Credit what goes out |
Short Quiz for Self-Evaluation
>Related Long Quiz for Practice Quiz 35 – Fixed Assets
>Read Journal Entry for Profit on Sale of Fixed Assets