GRADE 11 LESSON

24

FIXED ASSETS

DISPOSAL OF FIXED ASSETS

WORKSHEET 9
Disposal of fixed assets during the year
(depreciation at diminishing balance method)

Look at the date of sale

EXAMPLE 7 30 September 2013
(during the year)

INFORMATION
At the beginning of the financial year (1 March 2012) the following balances
appear in the books of ABC Traders:
Vehicles R78 000
Accumulated Depreciation R26 000.

On 30 September 2012 ABC sold an old vehicle to XYZ for R11 800 on credit.
This vehicle originally cost R19 000.
The total amount of depreciation to the end of the previous financial year was R8 500.
Depreciation is calculated at 20% per annum according to the diminishing balance
method.

Look at the date of accumulated

depreciation
(in the beginning of the year)

24 Accounting Grade 11 - CAPS 1

Step 1 – calculation of depreciation

1/03/12 31/09/05 28/02/13

1________________________1___________________________1
date of date of sale
accumulated of vehicle
depreciation Therefore the accumulated depreciation
on date of sale must be calculated
Depreciation

R19 000 – R8 500 = R10 500 x 20% x7/12 (7 months)

= R1 225

Step 2 – accumulated depreciation on date of sale

1/03/12 31/09/12 28/02/13

1_________________________________1__________________1

acc dep acc dep

beginning of on date
year
+ depreciation = of sale
for 6 months

R8 500 + R1 225 = R 9 725

STEPS
1 depreciation R1 225
2 transfer acc dep R8 500 + R1 225 = R9 725
3 transfer cost R19 000
4 sell R11 800
5 calculate profit/loss
Cost R19 000
less acc. dep. (R 9 725)
book value R 9 275
sold for (R11 800)
profit R 2 525 .

24 Accounting Grade 11 - CAPS 2

 GENERAL LEDGER OF ABC TRADERS

Vehicles
2012 2012-
Mar 1 Balance b/d 78 000 Sep 30 Asset disposal 19 000

Accumulated depreciation on vehicles

2012- 2012
Sep 30 Asset disposal 9 725 Mar 1 Balance b/d 26 000
2012-
Sep 30 Depreciation 1 225

Depreciation
2012- Accumulated
Sep 30 depreciation on 1 225
vehicles

Debtors control
2012
Mar 1 Balance b/d 20 000
2012-
Sep 30 Asset disposal 11 800

Asset disposal
2012- 2012- Accumulated
Sep 30 Vehicles 19 000 Sep 30 depreciation on
vehicles 9 725
Profit on sale of
asset 2 525 Debtors control 11 800
21 525 21 525

Profit on sale of assets

2012-
Sep 30 Asset disposal 2 525

Do activities from the text book on asset disposal

during the financial year
(depreciation at diminishing balance method)

24 Accounting Grade 11 - CAPS 3