An organisation's asset register shows a carrying amount of $145,600. The non-current asset account in the nominal ledger shows a carrying amount of $135,600. The difference could be due to a disposed asset not having been deducted from the asset register. Which one of the following could represent that asset?
A Asset with disposal proceeds of $15,000 and a profit on disposal of $5,000
B Asset with disposal proceeds of $15,000 and a carrying amount of $5,000
C Asset with disposal proceeds of $15,000 and a loss on disposal of $5,000
D Asset with disposal proceeds of $5,000 and a carrying amount of $5,000strong text
Answer is "A".
The Process is as follows.
Asset Register - $ 145,600.00
Asset Account - $ 135,600.00
Difference - $ 10,000.00
Reason for Difference - Disposed Asset not being deducted from the Asset Register ( As said in the Question ).
Double Entry is as Follows.
Disposal Account ( Profit on Dispoasl ) DR - 5,000.00
Disposal Account ( Disposal Proceeds ) CR - 15,000.00
Therefore the Balance in the Disposal Account is Debit $ 10,000.00
Disposal Account Debit Entry ( $ 10,000.00 ) Double Entry is as follows
Disposal Account DR $ 10,000.00
Asset A/C CR $ 10,000.00
For any Further Reference Please Refer.
Thanks and Regards.