Thursday, January 10, 2008

#34 Accounting for Fixed Asset written off

When the Company decide to write off the fixed asset, the following entries will be passed:

Dr. Accumulated Depreciation
Dr. Loss on Asset written off (if any)
Cr. Fixed Asset ( at cost)

The company would write off the fixed asset in the following circumstances:

1) The company may write off the fixed asset, if the assets are no longer in feasible use.
2) The fixed assets have been fully depreciated.

In case 1 above, the company might incurred a loss on fixed asset written down if the net book value is > nil. Whereas, when the assets have been fully depreciated ( as in case 2), no losses will be incurred upon written off.

8 comments:

Hung & Lynh said...

How should we write off straight line rent when tenant has early termination?

Anonymous said...

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Anonymous said...

can I ask you? does the Company have to prepare a certificate of written off of fixed assets and apporved by the Director?

Anonymous said...

do i have to prepare certificate of written-off and approved by director?

Kauditor said...

Hi all,

The Company would require to fill up internal form (i.e. Fixed Asset Disposal forms) for the appropriate personnel to approve.

The internal form can be customised to suit own Company's needs.

Does it has to be approved by Directors? Not necessary. However, it has to be , at least, approved by a senior management.

Wafa said...

Hi ! We are a private institution and we have never done an annual inventory of our fixed assets until recently. It turned out to be real problematic and we are unable to match and identify many of our assets to the Fixed Assets register, especially the old ones on record. Had any company/institution been in similar situation ? The worse that can happen is to write off several records, but still.

Thanks for any input !