Accounting Entries – Fixed Assets

1 Asset Cost Asset Account

2 Asset Clearing Asset Account
3 Depreciation Expense Expense Account
4 Accumulated Depreciation Contra-Asset Account
5 Deferred Depreciation Reserve Liability Account
6 Deferred Depreciation Expense Expense Account
7 Depreciation Adjustment Expense Account
8 Proceeds of Sale Clearing Asset Account
9 Cost of removal Clearing Liability Account
10 Gain & Loss Revenue Account

Here are the entries made by FA.

Transaction Natural Account Debit
Credit

Asset is added Asset Cost $100

Asset Clearing $100

Asset Depreciation Depreciation Expense $100

Accumulated Depreciation $100

Asset Retirement –
W/o proceeds and W/o removal cost Accumulated Depreciation $60
Gain/Loss $40
Asset Cost $100

Asset Retirement –
With Proceeds, W/o Cost of removal Accumulated Depreciation $60
Gain/Loss $40
Gain/Loss $10
Proceeds from Sale $10
Asset Cost $100

Asset Retirement -
With Cost of removal Accumulated Depreciation $60
Gain/Loss $40
Gain/Loss $5
Cost of removal Clearing $5
Asset Cost $100

Normal Addition of assets

Purchasing:
1. When Asset Item is received
Receiving Inventory Account DR
To Inventory AP Accrual Account CR

2. When Item is Delivered to Asset

Asset Clearing Account Dr
To Receiving Inventory Account Cr

Payables
1. When Invoice for Asset Item is Created
Inventory AP Accrual Account Dr
To Account Payable Liability Account Cr
2. When Invoice is paid in AP
Account Payable Liability Account Dr
To Bank Account Cr

Assets
1. Entry in Assets
Assets Acc Dr
To Asset Clearing Ac Cr

2. Depreciation Expenses
Depreciation Acc Dr
Depreciation Adjustment Acc Dr
To Accumulated Depreciation Cr

3.Merge Two Assets

Assets (A+B) Dr
To Asset Clearing Ac (A) Cr
To Asset Clearing Ac (B) Cr

4. CIP Assets
Payables:
CIP Clearing Acc DR
To Accounts Payable acc Cr

5. When we add an asset as CIP asset, then we will have the entrt as
CIP cost acc Dr
To CIP Clearing acc Cr

For these type of assets, we will not charge depreciation until and unless we
Capitalize the assets

6. Capitalized in the same period

Payable
CIP Clearing acc Dr
To Liability account Cr

Asset acc Dr
To CIP Clearing Cr

7. Capitalized after closing the Period

Asset acc Dr
To CIP Clearing

8. When we adjusted the regular asset to the CIP Asset

CIP Cost acc Dr
To Asset Clearing acc

9. Retirement of Asset
Receivable
Receivable acc Dr
To Proceeds of sales acc Cr

Payables
Asset Clearing (Cost Removable Acc)
To Payable Acc