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AA-60 How to Record Replacement of Fixed Assets With New Assets

My Videos (Accounts Officer ) (717 Points)

08 July 2024

All Respected Members,

Hope all of you are fine with good health and doing well.

Please educate me on following:

Suppose, we have a laptop which is booked in accounts as fixed assets and has a book value Rs.30K

This laptop has been damaged due to some reason.

A supplier give us offer that he will buy this damaged laptop from us Rs.15K and if we give him 20K cash with this damaged laptop, he will give us a new laptop, Please let me know: how we will record it in our account ? Please share journal entry.

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11 Replies

My Videos (Accounts Officer ) (717 Points)
Replied 10 July 2024

Response awaited from all respected members.

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Rama chary Rachakonda (Master in Accounts & Lawyer email ID:ramachary64@gmail.com voice no:9989324294) (5175 Points)
Replied 10 July 2024

debit new laptap cost credit old laptap sale account and Bank account and P & L account (with difference amount of new and old laptop cost)

My Videos (Accounts Officer ) (717 Points)
Replied 10 July 2024

Originally posted by : Rama chary Rachakonda
	debit new laptap cost credit old laptap sale account and Bank account and P & L account (with difference amount of new and old laptop cost)

Dear Rama Chary Rschakonda,

Thanks for your informative reply and your precious time to reply my above query.

As per your reply, I made below journal entries for using my above mentioned example. I really appreciate if you please confirm that below entries are correct:

New Laptop Dr. 35K

Loss on Sale of Assets DR.15K

Bank Cr. 20K

Old Laptop Cr. 30K

1 Like

My Videos (Accounts Officer ) (717 Points)
Replied 12 July 2024

Dear Rama Chary Rschakonda, Your kind response awaited.

My Videos (Accounts Officer ) (717 Points)
Replied 14 July 2024

Originally posted by : My Videos
	Dear Rama Chary Rschakonda, Your kind response awaited.

Dear Rama Chary Rschakonda Sir, Your kind response awaited on above query.

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CA Rajat Gupta (Assistant Manager) (29 Points)
Replied 16 July 2024

My opinion is that you should record the new laptop at its fair value irrespective of the selling price and cash paid on the older one. The net value in the transaction can be recorded as profit/loss. Hope this works!

My Videos (Accounts Officer ) (717 Points)
Replied 17 July 2024

Originally posted by : CA Rajat Gupta
	My opinion is that you should record the new laptop at its fair value irrespective of the selling price and cash paid on the older one. The net value in the transaction can be recorded as profit/loss. Hope this works!

Dear Rajat Gupta Sir, Thanks for your valuable reply. Please let me know if I booked fair value of laptop (as per my example mentioned above mentioned) which account should be credited ? because as per my above mentioned example new laptop value is 35K whereas we paid cash 20K so in which account difference amount 15 will be recorded ? Further, I really appreciate if you help me to inform the procedure of recording old laptop as per my above mentioned example.

My Videos (Accounts Officer ) (717 Points)
Replied 18 July 2024

Originally posted by : My Videos
	Originally posted by : CA Rajat Gupta My opinion is that you should record the new laptop at its fair value irrespective of the selling price and cash paid on the older one. The net value in the transaction can be recorded as profit/loss. Hope this works! Dear Rajat Gupta Sir, Thanks for your valuable reply. Please let me know if I booked fair value of laptop (as per my example mentioned above mentioned) which account should be credited ? because as per my above mentioned example new laptop value is 35K whereas we paid cash 20K so in which account difference amount 15 will be recorded ? Further, I really appreciate if you help me to inform the procedure of recording old laptop as per my above mentioned example.

Dear Rajat Gupta Sir,

Your kind response awaited.

My Videos (Accounts Officer ) (717 Points)
Replied 24 July 2024

Originally posted by : My Videos
	Originally posted by : My Videos Originally posted by : CA Rajat GuptaMy opinion is that you should record the new laptop at its fair value irrespective of the selling price and cash paid on the older one. The net value in the transaction can be recorded as profit/loss. Hope this works! Dear Rajat Gupta Sir,Thanks for your valuable reply. Please let me know if I booked fair value of laptop (as per my example mentioned above mentioned) which account should be credited ? because as per my above mentioned example new laptop value is 35K whereas we paid cash 20K so in which account difference amount 15 will be recorded ?Further, I really appreciate if you help me to inform the procedure of recording old laptop as per my above mentioned example. Dear Rajat Gupta Sir, Your kind response awaited.

Dear Rajat Gupta Sir,

Please reply on above.

My Videos (Accounts Officer ) (717 Points)
Replied 30 July 2024

Originally posted by : My Videos
	Originally posted by : My Videos Originally posted by : My VideosOriginally posted by : CA Rajat GuptaMy opinion is that you should record the new laptop at its fair value irrespective of the selling price and cash paid on the older one. The net value in the transaction can be recorded as profit/loss. Hope this works! Dear Rajat Gupta Sir,Thanks for your valuable reply. Please let me know if I booked fair value of laptop (as per my example mentioned above mentioned) which account should be credited ? because as per my above mentioned example new laptop value is 35K whereas we paid cash 20K so in which account difference amount 15 will be recorded ?Further, I really appreciate if you help me to inform the procedure of recording old laptop as per my above mentioned example.Dear Rajat Gupta Sir,Your kind response awaited. Dear Rajat Gupta Sir, Please reply on above.

3rd Reminder

Dear Rajat Gupta Sir,

Your kind response awaited on above.

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My Videos (Accounts Officer ) (717 Points)
Replied 01 August 2024

Originally posted by : My Videos
	Originally posted by : My Videos Originally posted by : My VideosOriginally posted by : My VideosOriginally posted by : CA Rajat GuptaMy opinion is that you should record the new laptop at its fair value irrespective of the selling price and cash paid on the older one. The net value in the transaction can be recorded as profit/loss. Hope this works! Dear Rajat Gupta Sir,Thanks for your valuable reply. Please let me know if I booked fair value of laptop (as per my example mentioned above mentioned) which account should be credited ? because as per my above mentioned example new laptop value is 35K whereas we paid cash 20K so in which account difference amount 15 will be recorded ?Further, I really appreciate if you help me to inform the procedure of recording old laptop as per my above mentioned example.Dear Rajat Gupta Sir,Your kind response awaited.Dear Rajat Gupta Sir,Please reply on above. 3rd Reminder Dear Rajat Gupta Sir, Your kind response awaited on above.