Note to the Balance Sheet and Asset Disposal

Key Reminders

• Additional Depreciation: If an asset is sold part-way through the year, calculate depreciation up to the date of sale.
• Note 3 to the Balance Sheet: Lists each asset category (e.g., Land & Buildings, Vehicles, Equipment), along with cost price, accumulated depreciation, and the resulting carrying value.
• Disposal: When an asset is sold, remove both its cost and accumulated depreciation from the relevant ledger accounts, and post them to the Asset Disposal account.

Note 3 to the Balance Sheet

Use this format (or any approved textbook format) to present Property, Plant, and Equipment details:

3. Property, Plant & Equipment	Land & Buildings	Vehicles	Equipment	Total
Cost Price	60 000
– Accumulated Depreciation	(20 000)
= Carrying Value on the Last Day of the Previous Year	40 000
Movements:
+ Additions at Cost Price	30 000
– Disposals at Carrying Value (Book Value)	(5 000)
– Depreciation for the Year	(15 000)
= Carrying Value on the Last Day of the Current Year	50 000
Cost Price	85 000
– Accumulated Depreciation at End of Year	(35 000)
= Carrying Value on the Last Day of the Current Year	50 000

General Ledger Accounts

• Vehicles/Equipment (Fixed Asset account): Shows the cost of the asset and any disposals.
• Accumulated Depreciation: Reflects the total depreciation to date.
• Asset Disposal: Temporarily holds the cost and accumulated depreciation of the asset sold, plus the proceeds of the sale, to determine profit or loss.
• The procedure at the end of the financial year is also illustrated