Page 233 - Accountancy_F5
P. 233
Date Description Folio Debit Credit
TZ “000” TZS “000”
31 Dec. 2024 Accumulated depreciation on motor 12,500
st
vehicle account
Disposal of motor vehicle account 12,500
Removal of accumulated depreciation
FOR ONLINE READING ONLY
from books of the disposed motor
vehicle
31 Dec. 2024 Cash account 3,000
st
Disposal of motor vehicle account 3,000
To record receipt of proceeds from the
disposed motor vehicle
LANGUAGE EDITING
31 Dec. 2024 Disposal of motor vehicle account 500
st
Statement of P/L 500
To record gain on disposal of motor
vehicle.
Dr Motor vehicle disposal account Cr
TZS TZS
Date Details Date Details
“000” “000”
Dec. 31 , 2024 Motor vehicles 15,000 Dec. 31 , Accum. depreciation 12,500
st
st
Disposal gain 500 2021 Cash 3,000
15,500 15,500
Disposal of non-current asset before the end of useful life
A non-current asset may be disposed before the end of its useful life. When the PPE is
sold in this scenario, it is necessary to be certain that depreciation has been provided for
up to the time of sale. Usually, before recording the sale, an entry must be made to record
depreciation up to the date of disposal. The depreciation figure will depend on the policy
of the business, whether to record a partial or a full year’s depreciation or none at all.
Example 7.13
On 1 April 2022; Jitegemee Company Limited sold one of its machines for TZS
st
5,500,000 cash. The machine was bought on 4 July 2019, for TZS 15,000,000 cash
th
and expected to have a service life of five years, with no residual value. The business
uses straight line method of depreciation.
Required: Show the relevant journal entries, accumulated depreciation account and
machinery disposal account at 31 Dec 2022.
st
Student’s Book Form Five
220
23/06/2024 17:35
ACCOUNTANCY_DUMMY_23 JUNE.indd 220
ACCOUNTANCY_DUMMY_23 JUNE.indd 220 23/06/2024 17:35