How to sale and record fixed asset in QuickBooks Desktop

In this tutorial, we will see how we can sell a fixed asset on book value, at gain, and at loss.

 

 

First, we will see when a fixed asset is sold at book value

So, go to your chart of account to see the book value of the asset you want to sell….and let’s say this is the asset I am going to sell on its book-value which is 3390, and when you go to the balance sheet, this is how it appears in the balance sheet

Instructional Tutorial:

 

Anyhow, to record the sale of the asset, select “Make general journal entries” option under the company menu, here change the date you sell your asset on. Now select your concerned bank account because you will receive money in return and to eliminate the effect of the accumulated depreciation from your books concerning the asset you are going to sell, select its accumulated depreciation account and eliminate its effect by adding the concerned amount in the debt column and what remain is the cost of the asset we bought it on and since we are selling an asset, it won’t be a business property anymore, so select the cost account of the asset you are going to sell and write its full cost on the credit side to counter its value.

Now write some memo if you want or just click on “save and close” to record the entry.

And here you can see that the value of the sold asset has gone down to zero, and when you go to the balance sheet, it doesn’t show HP ZBook anymore.

Now the second scenario is, when an asset is sold at gain.

Now, to sell the same asset at gain I am going to delete the journal entry to reverse the effect and here you can see that it’s been reversed. Now, go back to create journal entry again, here select your concerned bank account and let’s suppose that the hp ZBook has been sold at 4000 this time, and then eliminate the effect of the accumulated depreciation by debiting its value and since we are selling an asset, we don’t own it anymore, so credit its cost amount. Now what’s left is the deference that we gain on selling this asset and remember it’s not the income that you earned by doing your regular business so you can’t add it to your direct income account and if your expertise is not in accountancy, just select “Ask my accountant” account and equalize the amount in the journal entry and then record it and your accountant or CPA will take care of it or click on “Add new” and create a new account by selecting the account type “Other Income”, you can name it whatever you want. I am just naming it “Gain fixed asset sold” and then click on “Save and Close” to create the account and then write some memo if you want or just click on “save and close” to record the entry.

And here you can see, that the value of the asset has gone down to zero again and here is the other income type account we have just created and when you go to the balance sheet, it doesn’t show HP ZBook anymore and when you open profit and loss statement you will be able to see the gain you earned by selling the fixed asset separately since the gain was not earned by doing the regular business.

Now the third scenario is, when an asset is sold at loss.

Now, to sell the same asset at loss I am going to delete the journal entry again to reverse the effect and here you can see that it’s been reversed. Now, go back to create journal entry again. here select your concerned bank account and let’s suppose that the hp ZBook has been sold at 3000 this time, and then eliminate the effect of the accumulated depreciation by debiting its value and since we are selling an asset, we don’t own it anymore so credit its cost amount. Now what’s left is the deference that we loss on selling this asset.

Now to record the loss, we can use the “Ask my Accountant” account and or “Gain fixed asset sold” account and then we can leave it for the accountant or CPA to take care of it but instead of selecting either of these two, I am going to create a new account by selecting the account type “Other Expense” you can name it whatever you want. I am just naming it “Loss fixed asset sold” and then click on “Save and Close” to create the account and then write some memo if you want or just click on “save and close” to record the entry and here you can see, that the value of the asset has gone down to zero again and here is the “other expense” type account we have just created and when you open the profit and loss statement. Here you will be able to see the loss you borne by selling the fixed asset since the loss was not borne by doing the regular business.

Anyhow, when you have sold your asset, you can go to the fixed assets items list and change the status of the sold asset by clicking on this check box and filling the concerned fields, moreover, you can select this check box to inactive this asset from the items list too to keep the list clean and whenever you buy this asset again, instead of creating new item in the items list, just click on “Include Inactive” check box and then click on the cross sign to reappear it in the items list.

Anyhow, whatever the case may be, if you are not comfortable with recording journal entries, then ask your accountant or CPA to take care of this and this is how you can record the sale of a fixed asset in QuickBooks desktop and I hope this will be helpful for someone out there and thanks for watching.