Accounting Entries Of Assets

[suryabvn]

Hi,

Can anyone please give the detailed accounting entries through the Asset Cycle.

Regards
Surya

[mpdhas@gmail.com]

1In PURCHASING while performing PO receipt

Asset Clearing Account Dr
To PO Accrual Account Cr

2.In AP while entering supplier invoice by PO matching

PO Accrual Account Dr
To AP Liability Account Cr

Net accounting entry is

Asset Clearing Account Dr
To AP Liability Account Cr


3. In FA on performing Post Mass Addition

Asset Cost Account Dr
To Asset Clearing Account Cr

The net entry at this stage will be

Asset Cost Account Dr
To AP Liability Account Cr

4. In AP on making payment for the asset purchase


AP Liability Account Dr
To Bank Account Cr

The net accounting effect after payment will be

Asset Cost Account Dr
To Bank Account Cr

[suryabvn]

Thanks 4 the update, but I was more concerned about the Acc. Dep. account and the entries that are passed on depreciation and retirements.

Regards
Surya

[mpdhas@gmail.com]

Hi,

I am giving you one example upto asset retirement.

Accounting Entries on Asset Addition

Assuming that an asset cost of Rs.10000 is purchased.



1.In PURCHASING while performing PO receipt

Asset Clearing Account Dr 10,000
To PO Accrual Account Cr 10,000

2.In AP while entering supplier invoice by PO matching

PO Accrual Account Dr 10,000
To AP Liability Account Cr 10,000

Net accounting entry is

Asset Clearing Account Dr 10,000
To AP Liability Account Cr 10,000


3. In FA on performing Post Mass Addition

Asset Cost Account Dr 10,000
To Asset Clearing Account Cr 10,000

The net entry at this stage will be

Asset Cost Account Dr 10,000
To AP Liability Account Cr 10,000

4. In AP on making payment for the asset purchase


AP Liability Account Dr 10,000
To Bank Account Cr 10,000

The net accounting effect after payment will be

Asset Cost Account Dr 10,000
To Bank Account Cr 10,000


On running Depreciation for 1st year (assume 10% Dep)

Depreciation Exp Account Dr 1,000
To Accumulated Depreciation Cr 1,000


Retirement
Suppose the above asset is retired in the end of 4 th year for a sale proceeds of Rs.15,000 and expenses incurred on removal is 2,000 the following are the accounting entries.

Accounting Entries in FA module

Accumulated Depreciation Account Dr 4,000
Proceeds of sale clearing account Dr 15,000
To Asset Cost account Cr 10,000
To Gain on sale of asset account Cr 7,000
To Cost of removal clearing accountCr 2,000

Accounting Entries in AP

Cost of removal clearing account Dr 2,000
To AP Liability account Cr 2,000

Accounting Entries in AR

Receivable Account Dr 15,000
To Proceeds of sale clearing account Cr 15,000


If the sale value of that asset is 5000 then there will be loss


Accumulated Depreciation Account Dr 4,000
Proceeds of sale clearing account Dr 5,000
Loss on sale of asset Account Dr 3,000

To Asset Cost account Cr 10,000
To Cost of removal clearing accountCr 2,000


I hope you are clear now.

Regards,
Dhas