When you sell or dispose of an asset on your Balance Sheet, like a tractor, truck, or bull, you need to take it off your Balance Sheet and record any gain or loss. The gain or loss is the difference between the asset's book value and what you got for it. Book value is its original cost minus any depreciation you've recorded.
Ambrook records both gains and losses in one category, Gain or Loss on Sale of Asset. On your Profit & Loss report, a gain shows as a positive amount and a loss as a negative one. In your Ledger, the sign depends on how the entry was recorded. For example, a loss in a journal entry is a debit, so it may show as a positive number. If you're buying an asset instead, see Recording Asset Purchases.
Your situation | Go to |
Sold it, and you don't depreciate it | Record the sale |
Scrapped, died, or given away | No money changed hands |
Sold it, and you do depreciate it | If you track depreciation |
Traded it in | |
Never on your Balance Sheet | If it was expensed or is fully depreciated, tag the full sale to Gain or Loss on Sale of Asset. If it still has a book value, add it first, then record the sale. |
Record the sale
On the Accounts page, click the asset. Its balance is its book value.
In the Ledger, find the sale deposit. If you were paid in cash, first click New > Transaction and record the cash to Cash on Hand.
Click Itemize and create two line items:
The asset's book value.
The difference. For a gain, enter it as a positive amount. For a loss, enter it as a negative amount, with a minus sign.
Tag the book value line as Asset Adjustment (under Record on Balance Sheet), with the asset's account in the From field.
Tag the difference line as Gain or Loss on Sale of Asset.
Example | Gain | Loss |
Book value / sale deposit | $8,000 / $10,000 | $8,000 / $5,000 |
Line 1: Asset Adjustment | $8,000 | $8,000 |
Line 2: Gain or Loss on Sale of Asset | $2,000 | –$3,000 |
If the check was net of sale-barn commission or other selling costs, use the amount you received. Selling costs reduce your gain, so you don't need a separate line for them.
No money changed hands
If the asset was scrapped, died, or was given away and you received nothing for it, follow these steps. If you got salvage or insurance money, follow Record the sale instead, using that payment as the sale deposit.
On Accounts, click the asset and select Adjust Balance.
Set the balance to 0, dated when you got rid of it, and click Save.
In the Ledger, tag the new Balance Adjustment to Gain or Loss on Sale of Asset.
If the asset was fully depreciated or had a $0 book value, removing it has no effect on your Profit & Loss. For raised breeding stock, see Tracking & Valuing Breeding Stock.
If you track depreciation
The sale also has to clear the accumulated depreciation.
Bring depreciation up to date. If the asset has an Ambrook schedule, open it on Accounts, click ... under Book Depreciation, and choose Cancel schedule. Don't choose Delete, which erases posted history. Then record any depreciation through the sale date with a journal entry, whether it's scheduled or tracked manually.
Tag the sale deposit as Asset Adjustment, with the asset in From. Skip this step if no money changed hands.
Post one journal entry (Ledger > New > Journal Entry). Debit accumulated depreciation for its full balance, credit the asset for what's left on it, and use Gain or Loss on Sale of Asset to make it balance.
Example: a tractor bought for $8,000, with $6,000 of accumulated depreciation, has a book value of $2,000.
Scenario | Accumulated Depreciation | Tractor | Gain or Loss on Sale of Asset |
Sold for $3,000 | Debit $6,000 | Credit $5,000 | Credit $1,000 |
Sold for $1,500 | Debit $6,000 | Credit $6,500 | Debit $500 |
Scrapped (no deposit) | Debit $6,000 | Credit $8,000 | Debit $2,000 |
If the asset has an Ambrook schedule, use the accumulated depreciation account listed under the asset. If you use one Accumulated Depreciation account for all your assets, debit only this asset's share.
If the asset is fully depreciated, its accumulated depreciation equals its original cost. If you scrapped it or gave it away, your journal entry just debits accumulated depreciation and credits the asset for the same amount, with no gain or loss line. If you sold it, follow the steps above as usual. The full sale amount will be your gain.
Close the account and check your work
When the asset reads $0, click Remove Account > Close Account at the bottom of its side panel. Don't choose Delete Account, which erases the history.
If the asset had an Ambrook depreciation schedule, its accumulated depreciation account closes along with it. You don't need to close it separately. Ambrook won't close an asset with an active schedule, so make sure you've cancelled it first.
To check your work:
View Register on the asset shows a $0 balance. If you tracked depreciation, its accumulated depreciation also reads $0.
Reports > Profit & Loss shows the gain or loss under Other Income > Other Inflow in the month of the sale.
Reports > Balance Sheet shows the asset at $0 from that month on.
FAQ
My asset account isn't $0 after I tagged the sale.
You probably tagged the whole deposit as Asset Adjustment. If the account is negative, you sold at a gain. If it still has a balance, you sold at a loss. Either way, itemize the deposit as shown above.
What about taxes?
Tax treatment is separate from your books. That includes depreciation recapture, Section 1231 gains, and like-kind exchanges on trade-ins. Your tax preparer won't use the gain or loss from your books directly. They'll need the details of the sale: the sale price, the date you sold it, what you originally paid, and when you bought it. Let your accountant know about any journal entries you made.