Gain on Sale of Assets
Definition: Proceeds exceed book value
Scope:ModerateDifficulty:Easy
Proceeds exceed book value
Common Journal Entries
| Account | Debit | Credit |
|---|---|---|
| 1. Sell asset at a gain | ||
| Equipment cost $30,000, accum depr $22,000, sold for $12,000. | ||
| CashAsset+ | $12,000 | |
| Accumulated DepreciationContra Asset− | $22,000 | |
| EquipmentAsset− | $30,000 | |
| Gain on Sale of AssetsRevenue+ | $4,000 | |
| Book value $8,000; proceeds $12,000; gain $4,000. | ||
T-AccountsA visual representation of a ledger account shaped like the letter T. Left side shows debits, right side shows credits.
CashAsset account. Debits increase the balance. Credits decrease the balance.AssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$12,000.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$12,000.00
Accumulated DepreciationAccumulated DepreciationLiabilityAn obligation the business owes to others. Normal balance: credit. Credits increase, debits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$22,000.00
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
Normal bal. ▶
$22,000.00
EquipmentEquipmentAssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$30,000.00
$30,000.00
Gain on Sale of AssetsGain on Sale of AssetsRevenueIncome earned from business operations. Normal balance: credit. Credits increase, debits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$4,000.00
Normal bal. ▶
$4,000.00
DurationN/A
External Links
- Disposal of fixed assets — Wikipedia