Disposing of a fixed asset

When to record a disposal

Record a disposal when:

• You sell an asset to another party.
• You scrap or write off an asset (proceeds = nil).
• You part-exchange an asset (trade-in value = proceeds).
• An asset is lost or stolen (insurance proceeds = disposal proceeds).
• An asset is gifted or transferred to another entity.

Recording a disposal in AccBooks

1. Go to Fixed assets → Register.
2. Click the asset you’re disposing of.
3. Click Dispose.
4. Enter:
   • Disposal date
   • Proceeds — the sale price (enter 0 for scrapped assets)
   • Disposal method: Sale, Scrap, Part-exchange, Gift
   • Notes — any relevant detail
5. Click Record disposal.

AccBooks automatically:

• Posts final depreciation up to the disposal date (pro-rated).
• Removes the asset from the active register.
• Calculates the profit or loss on disposal.
• Posts the disposal journal.

The disposal journal

Example: Computer with cost £2,400 and accumulated depreciation £1,600, sold for £600.

Entry	Debit	Credit
Remove cost	—	Fixed asset cost £2,400
Remove accumulated depreciation	Accumulated depreciation £1,600	—
Record proceeds	Bank / debtors £600	—
Record profit/(loss) on disposal	—	Profit on disposal £200

Profit on disposal (£200) appears on the P&L as other income. A loss on disposal (negative) appears as an expense.

Part-exchange (trade-in)

When trading in an old asset for a new one:

1. Record the disposal of the old asset with proceeds equal to the trade-in value.
2. Record the new asset at its full purchase price.
3. The net payment to the supplier is the difference.

AccBooks guides you through this process under Fixed assets → Dispose → Part-exchange. You’re prompted to enter the new asset details in the same flow.

Capital allowances on disposal

When you dispose of an asset that’s in the main or special rate pool, AccBooks records a disposal value in the relevant tax pool. This reduces the pool balance:

• If pool balance after disposal > 0: Writing Down Allowance continues on the remaining balance.
• If proceeds exceed the remaining pool balance: a balancing charge arises (taxable income).
• If the pool is empty: a balancing allowance may arise (additional deduction).

AccBooks updates the capital allowances calculation automatically when you record a disposal.

Fully depreciated assets

If you sell a fully depreciated asset (NBV = £0), the entire proceeds are profit on disposal. The journal removes the cost from the fixed asset account and credits the disposal proceeds to profit on disposal.

Assets sold at a loss

If proceeds are less than NBV, the difference is a loss on disposal — an expense on the P&L. Losses on disposal are generally deductible for corporation tax purposes (they go through the capital allowances pool rather than as a direct deduction).

Stolen or written-off assets

Record proceeds as 0 (or the insurance payout if covered). Add a note explaining the circumstances. If insurance proceeds are received later, record them as miscellaneous income.