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What are the entries into the Accounting equation when an asset is sold for greater than...

Question

What are the entries into the Accounting equation when an asset is sold for greater than...

What are the entries into the Accounting equation when an asset is sold for greater than its current book value?

If sold for less than current book value?

What is the impact on taxes owed in both situations?

Answers

Ans. This question is from Economics Accounting Branch

The entry for Sale of Asset would be :

Cash or Bank A/c _ Dr.

To Asset A/c

The entry for sale more than current value :

Cash or Bank A/c _ Dr.

To Asset A/c

To Profit and Loss A/c ( Profit )

The entry for sale less than current value :

Cash or Bank A/c _ Dr.

Profit and Loss A/c _ Dr.

To Asset A/c

In first situation , taxes would be levied on profit on sale of asset. In second situation , there is no such treatment.

Best of Luck !! !!


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