Mass Disposal or Retirement of Fixed Assets

We have previously written about disposal of a single asset but there are also situations where a whole group of assets are retired or sold. When an organization sells a plant, building or part of their business they need to record the retirement of all associated asset records.

Below is a screen shot of the Mass Disposal feature of Bassets eDepreciation:

Mass Disposal or Retirement of Fixed Assets

This form accepts disposal date, proceeds of sale and disposal method as input values. A filter can then be applied to select a group of asset records to apply the disposal properties. All of the associated asset records will be updated and then treated as disposals on any reporting periods after the disposal date.

The mass disposal utility is a handy feature to specifically address this request. If you need to make other changes to a group of records then a mass update from Excel is a good option.

Questions? Comments? Let us know in the comments section below.

More information about Bassets eDepreciation software can be found at Bassets.net or depre123.com. At Bassets register for our live webinar, download a free evaluation copy and get a personalized pricing estimate. At depre123 try out our Free Depreciation Calculator and check out our cloud based fixed assets application.

How to Dispose a Portion of a Fixed Asset

We recently had a question from one our clients asking how to dispose a portion of a fixed asset. In most disposal events the entire asset will be sold, junked or retired and the asset’s cost and accumulated depreciation will be removed. For a partial disposal, only a portion of the asset is removed and the remaining amount will continue to depreciate.

In this scenario, you must split the original asset into 2 separate components:

Partial Disposal

Based on the disposal date the original asset will stop depreciating and the new remainder asset will continue as the active asset now at the reduced value. The disposed portion will be accounted for in the new disposal record.

Splitting the original asset into two separate records serves several purposes:

  • Any historical report (prior to the disposal date) will show the correct depreciation in early years
  • Current reports will show the correct depreciation of the reduced cost
  • The disposed portion will stop depreciating

Not all fixed asset software will allow you to do a partial disposal. This is very important if you sometimes have to split larger assets into several components and then dispose of one or more of these components. Bassets eDepreciation allows for simple partial disposals by entering either a dollar amount or a percentage and then calculating both sides of the split for you.

Questions or comments on this post? We invite you to respond in the space below.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.

Disposal of Fixed Assets

There are many reasons for the disposal of capital assets by a business. It may be as simple as replacing an asset that has outlived its’ useful life, a sale of equipment or just plain retirement. No matter the reason, it is important that the transaction of a disposal is properly recorded for accurate accounting.

In most situations an asset is completely disposed, while other times a partial disposal is executed. For a complete disposal there will be a gain or loss based on the asset’s net book value (original cost minus accumulated depreciation) and any proceeds of sale. A partial disposal is a little more complicated since only a portion of the asset is disposed. This can occur with larger equipment made of several components.

Here is a sample disposal form in Bassets eDepreciation:

Disposal of Fixed Assets 2

For a complete disposal you only need to enter a disposal date and 100% of the asset will be fully disposed. Next enter the effective date of the disposal, any proceeds if sold and select a disposal method. Disposal methods include:

  • Abandonment
  • Destruction
  • Exchange
  • Retirement
  • Sale

For a partial disposal you need to enter a disposal date along with either a percentage or dollar amount to represent the portion of the asset that is being disposed. In this scenario, the original asset will continue depreciating at a reduced amount while a new asset is created for the disposed portion.

In both a complete and partial disposal it is critically important to be able to run a report for a current period before the disposal date and still see the correct depreciation amounts. Some systems simply mark the asset as disposed and then lose any history of the original values.

Here is a link to an earlier article on Depreciation Guru about the same topic that you may find useful:

http://www.depreciationguru.com/2012/06/article-how-small-businesses-can-dispose-assets/

Questions or comments about this post? We invite you to respond in the space below.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.