JE-11 Jan 2026Manualposted
Buy the van.
| Account | Dimensions | Debit | Credit |
|---|---|---|---|
| 1520 Vehicles | 48,000 US Dollar | ||
| 1000 Cash | 48,000 US Dollar | ||
| Totals | 48,000 US Dollar | 48,000 US Dollar | |
Balanced.
Journal entry for the sale of a fixed asset
When a fixed asset is sold, debit Cash for the proceeds and Accumulated depreciation for its balance, credit the asset for its original cost, and book the difference as a gain (credit) or a loss (debit) on sale.
- Net book value at sale
- $27,000
- Proceeds
- $22,500
- Loss on sale
- $4,500
- Entity
- Illustrative company
- Basis
- Accrual
- Currency
- USD
- Period
- Jan 2026 – Jun 2028
The worked example
The $48,000 van from the depreciation example is sold after 30 months for $22,500. By then $21,000 of depreciation has been booked, so it is carried at $27,000 and the sale produces a $4,500 loss. Owning it cost $25,500 in all: the depreciation plus the loss.
Transaction · January 1, 2026
Adjusting entry · June 30, 2028
JE-230 Jun 2028Adjustingposted
Depreciation booked over 30 months, summarized.
Journal entry JE-2, 2 lines Account Dimensions Debit Credit 6400 Depreciation expense 21,000 US Dollar 1510 Accumulated depreciation 21,000 US Dollar Totals 21,000 US Dollar 21,000 US Dollar Balanced.
Transaction · June 30, 2028
JE-330 Jun 2028Manualposted
Sell the van.
Journal entry JE-3, 4 lines Account Dimensions Debit Credit 1000 Cash 22,500 US Dollar 1510 Accumulated depreciation 21,000 US Dollar 7200 Loss on sale of assets 4,500 US Dollar 1520 Vehicles 48,000 US Dollar Totals 48,000 US Dollar 48,000 US Dollar Balanced.
What the entries do to the accounts
Every entry above posted to the ledger, starting from zero balances: the net debit or credit each account is left with. Debits equal credits, so the books still balance.
| Account | Debit | Credit |
|---|---|---|
| 1000 Cash | 25,500 US Dollar | |
| 6400 Depreciation expense | 21,000 US Dollar | |
| 7200 Loss on sale of assets | 4,500 US Dollar | |
| Totals | 25,500 US Dollar | 25,500 US Dollar |
2 accounts net to zero across the entries and are not shown.
Why it is booked this way
Selling an asset removes everything the books hold for it — the cost and the depreciation accumulated against it — and replaces it with the cash received. Whatever does not balance is the gain or loss: the difference between what the asset fetched and what it was carried at.
The gain is not revenue. It reflects that the depreciation estimate was too high, and it is reported outside operating income.
Common mistakes
- Crediting the proceeds to revenue.
- Removing the asset at net book value and leaving its accumulated depreciation behind on the balance sheet.
Questions
- Do I depreciate up to the sale date?
- Up to the date of sale. The final partial period's depreciation is booked first, so the net book value the gain is measured against is current.
- Where does the gain or loss appear?
- Outside operating income, as other income or expense, unless selling assets is the business.
Terms on this page
Work with this entry
The tool that computes the schedule, the concept behind it, the entries that come next and the components that render them.
- Depreciation scheduleStraight-line, declining balance or SYD, with the convention that decides the first period. Put your own figures in and get the schedule behind this entry.Tool
- Fixed assets, explained for foundersEquipment and other long-lived purchases above your capitalization threshold are recorded as assets, then depreciated over their useful life.Doc
- Journal entry for depreciationEach period, debit Depreciation expense and credit Accumulated depreciation for the period's charge. The asset account keeps its original cost; accumulated depreciation, a contra-asset, grows until net book value reaches salvage value.Entry
- Journal entry for an equipment purchaseWhen equipment is bought, debit the fixed asset account for its full cost — price plus delivery and installation — and credit Cash or Accounts payable. Nothing is expensed on the day of purchase; the cost reaches the P&L as depreciation.Entry
- DepreciationScheduleBook and tax in parallel. In-service date, not purchase date.Component
- RollForwardOpening → movements → closing → tie. The universal shape.Component
An illustrative company, not anyone’s real books. Every figure on this page is computed from the inputs in the example and posted by the same functions as the journal entry balancer. General information for US companies under US GAAP, not accounting or tax advice.