Asset disposals

An asset disposal records that an asset has left the business — sold, scrapped or donated — and posts the journal that takes it off your books. It is the last step in an asset's life: the asset is bought and registered, depreciated over its useful life, and then disposed of. Posting the disposal books the gain or loss, marks the disposal Posted and sets the asset's Status to Disposed.

Overview

A disposal holds three kinds of information:

• What and why — the asset, the company and branch, the disposal method, reason and date.
• The figures — the proceeds (Disposal Value), the asset's Purchase Cost, the Accumulated Depreciation charged so far and the resulting Net Book Value and Gain/Loss.
• Where it posts — four GL accounts: fixed asset, accumulated depreciation, proceeds and gain/loss.

You type all the figures and accounts on the disposal. xMatix does not read them from the asset or from its depreciation schedule.

When to use it

Create a disposal whenever an asset you depreciate leaves the business:

• you sell it, with proceeds;
• you scrap it because it is damaged or obsolete, usually with no proceeds;
• you donate it.

If you only want to mark a unit as no longer in use, without any accounting, set the asset's Status to Obsolete instead. See Assets.

How xMatix handles it

Post Disposal builds one balanced journal. The journal is dated on the Disposal Date (today, if the date is empty) and posted under the disposal's Company and Branch. Its lines are:

Gain or loss is Disposal Value minus Net Book Value. When Net Book Value is empty, xMatix uses Purchase Cost minus Accumulated Depreciation. A positive result is a gain and a negative one is a loss.

What posting changes. In the same save, the disposal gets Status Posted, its GL Posted flag, the journal link and the gain or loss that was booked. The linked asset gets Status Disposed, the disposal's Disposal Date and Disposal Value, and a Net Book Value of 0. If any check fails, nothing is saved.

What posting does not change. The asset's recurring depreciation schedule keeps running until you stop it. Nothing checks that the asset is not already disposed.

Prerequisites

• The asset exists in the register. See Assets.
• You know the asset's original cost and the depreciation charged on it up to the disposal date. Take them from your fixed-asset register and the posted depreciation journals. See Running depreciation.
• The GL accounts exist and are active: the fixed-asset account, the accumulated-depreciation account, an account for the proceeds (bank, cash or a clearing account) and a gain/loss on disposal account. See GL accounts.
• The fiscal period that covers the disposal date is open for the company. See Closing a period.
• Your security profile can create disposals and run Post Disposal. See Permissions.

Procedure

Step 1 — Find your disposals

Open the Fixed Assets app and select Asset Disposals. Summary cards at the top show Total Asset Disposals and Total Disposal Value. The list shows Name, Company, Branch, Asset, Disposal Date, Disposal Value, Purchase Cost, Disposal Method, Disposal Reason and the audit columns. Use the search box, the filters and the column sort to find a disposal, and select a row to open it.

Step 2 — Create the disposal

1. In Asset Disposals, select New.
2. Fill in Company and Branch, then pick the Asset and the Disposal Method (Sale, Scrap or Donation).
3. Under Additional Information, fill in Disposal Date, Disposal Reason (Sold, Damaged or Obsolete), Disposal Value (the proceeds; leave it empty for a scrap or donation with nothing received) and Purchase Cost (the asset's original cost).
4. Save.

The disposal is numbered automatically and its record page opens. The header shows Company, Branch, Asset, Disposal Method and Status.

If your organisation runs one company or one location, the Company and Branch fields are hidden. When a new disposal names neither, xMatix fills both from the owner's default company access, if the owner has one.

Step 3 — Complete the figures and the GL accounts

The create form has no GL accounts and no depreciation figures, so you fill them on the record page. Select a field's edit pencil, change the value and save.

1. On the Details tab, under Financial Calculations, check Purchase Cost and Disposal Value, and enter Accumulated Depreciation.
2. Leave Net Book Value empty. Posting then works it out as Purchase Cost minus Accumulated Depreciation. If you do enter it, it must equal exactly that figure.
3. Under Chart Of Accounts Details, set:
   • Fixed Asset GL Account — always required;
   • Accumulated Depreciation GL Account — always required, even when there is no depreciation;
   • Proceeds GL Account — required when Disposal Value is above zero;
   • Gain/Loss GL Account — required when the proceeds differ from net book value, which is almost always.
4. Check Status under Information. It has no effect on posting, so you can leave it empty.

If Branch is empty when you set the Fixed Asset GL Account, xMatix fills it from that GL account's own Branch, if it has one.

Profit/Loss Calculations shows Gain/Loss as Disposal Value minus Net Book Value while you work. Posting recalculates it.

Step 4 — Post the disposal

1. Select Post Disposal in the header.
2. xMatix checks the disposal, builds the journal and posts it.

On success, Status reads Posted. The asset's Status is now Disposed and its Net Book Value is 0. If a check fails, a message names the problem and nothing changes. See Common problems.

Step 5 — Check the journal

1. In the Finance app, open Journals.
2. Filter Source Entity Name on AssetDisposal and open the row whose Source Record is your disposal. Its label reads Asset disposal followed by the disposal number.
3. Check the lines against the table in How xMatix handles it. Debits must equal credits.

The Related tab on the disposal also has a journals list. In the standard layout that list is not linked to the disposal, so it shows other journals too. Use the Journals list instead. See Working with journals.

Step 6 — Stop the depreciation

Posting a disposal does not stop the asset's Recurring Depreciation schedule. Stop it so that no further charge posts after the disposal date. With the standard forms, open the schedule, select Edit and set End Date to a date before its Next Run Date. If your administrator has added Status to the schedule's form, set it to Completed instead. See Running depreciation.

Step 7 — Correct a posted disposal

A posted disposal cannot be posted again, and there is no un-post action.

1. Reverse the disposal's journal from the Journals list. See Working with journals. The reversal does not change the disposal or the asset: the disposal stays Posted and the asset stays Disposed.
2. If the asset was not really disposed of, open the asset and set its Status and Net Book Value back by hand. Disposal Date and Disposal Value on the asset keep the copied values until you clear them.
3. If the disposal was right but the figures were wrong, create a new disposal with the correct figures and post it.

Step 8 — Delete a draft disposal

On an unposted disposal, select Delete in the header and confirm. Do not delete a posted disposal: its journal stays posted, the asset stays Disposed, and you lose the record that explains both.

Fields

Create form

Record page only

Business rules

• Numbering. A saved disposal is named automatically from the Asset Disposal Settings document name setting, series AD.
• Checks before posting, in this order: not already posted; Fixed Asset GL Account set; Accumulated Depreciation GL Account set; Branch set; Company set; Purchase Cost above zero; Gain/Loss GL Account set when there is a gain or loss.
• Checks on the journal. Debits must equal credits. Every GL account must be active. A line on a control account needs a party, and disposal lines never carry one. The disposal date must fall in an open fiscal period of the company. If the company has no fiscal calendar for that date yet, xMatix creates the fiscal year with open monthly periods.
• Amounts are rounded to two decimals before posting.
• One post per disposal. A disposal whose Status is Posted, or whose GL Posted flag is on, is refused.
• The asset. Posting sets the asset's Status to Disposed, its Disposal Date and Disposal Value to the disposal's, and its Net Book Value to 0. Nothing else on the asset changes.
• Not automatic. Nothing posts a disposal on save or on a schedule; only Post Disposal does. No approval process is seeded for disposals.

Example

A delivery van was bought for 12,00,000. Depreciation of 7,80,000 has been posted, so its book value is 4,20,000. On 15 November it is sold for 3,50,000.

1. In Asset Disposals, select New. Choose the company, the Head Office branch, the asset Van 07 and Disposal Method Sale. Enter Disposal Date 15 November, Disposal Reason Sold, Disposal Value 3,50,000 and Purchase Cost 12,00,000. Save.
2. On the record page, enter Accumulated Depreciation 7,80,000 and leave Net Book Value empty. Set the GL accounts: Vehicles, Accumulated Depreciation – Vehicles, Asset Sale Clearing and Profit or Loss on Sale of Assets.
3. Select Post Disposal. The journal is:

1. The disposal shows Status Posted and Gain/Loss −70,000. Van 07 shows Status Disposed, Disposal Value 3,50,000 and Net Book Value 0.
2. Open the van's recurring depreciation schedule and stop it, as in Step 6.

Training

Practice exercise

In a sandbox, create an asset Practice Laptop. Then create a disposal for it with Disposal Method Scrap, Disposal Reason Damaged, no Disposal Value, Purchase Cost 80,000 and Accumulated Depreciation 60,000. Set the Fixed Asset, Accumulated Depreciation and Gain/Loss GL accounts, but no Proceeds GL account, and post it.

Expected result: the journal debits accumulated depreciation 60,000, credits the fixed-asset account 80,000 and debits the gain/loss account 20,000 as Loss on disposal. The disposal shows Gain/Loss −20,000 and Status Posted. Practice Laptop shows Status Disposed and Net Book Value 0. Select Post Disposal again: xMatix refuses, because the disposal is already posted.

Quick reference

• Create in Fixed Assets → Asset Disposals → New; GL accounts and Accumulated Depreciation are filled on the record page.
• Purchase Cost and Accumulated Depreciation are typed; nothing is read from the asset or the schedule.
• Leave Net Book Value empty, or the journal may not balance.
• Fixed Asset and Accumulated Depreciation GL accounts are always required.
• Proceeds above zero need a Proceeds GL account; any gain or loss needs a Gain/Loss GL account.
• Posting sets the disposal to Posted and the asset to Disposed with Net Book Value 0.
• Stop the recurring depreciation schedule yourself.
• No un-post: reverse the journal and fix the asset by hand.

Permissions

Disposal records follow the Asset Disposal entity's access in the user's security profile: see, create, edit and delete. The buttons are granted separately in the seeded profiles:

A user without Post Disposal does not see the button. The Fixed Assets app is granted to Sales Executive, Sales Manager, Standard User and System Admin. Because posting writes to the ledger, review who holds Post Disposal and give it to finance users only. See Security profiles.

Configuration

• Numbering. The Asset Disposal Settings document name setting controls the disposal number (series AD, a date part and a six-digit counter). Change the series or format there. See the Document Name Setting reference.
• Picklists. Disposal Method, Disposal Reason and Status values can be changed in Setup → Design Studio → Entities → Asset Disposal. Posting reads none of them, so changing them only affects reporting. Keep a value named Posted out of Status unless you want people to be able to choose it by hand, because a disposal with Status Posted can't be posted.
• Forms. An administrator can add the GL accounts, Accumulated Depreciation and Net Book Value to the create form, so the disposal is complete in one step, and can add GL Journal to the record page. The create layout is AssetDisposableCreate and the record layout is AssetDisposalView. The Related tab's journals list can be linked to the disposal in the same layout. See Design a form layout.
• Default branch on GL accounts. Set Branch (the account's default branch) on the fixed-asset GL accounts, so an empty Branch on a disposal is filled when the account is chosen. See GL accounts.
• Default company access. For single-company or single-location organisations, where Company and Branch are hidden, give each user who creates disposals a default company. Open Setup → Feature Hub → Administration → Org Settings, select the Company Access tab, pick the user and mark their company as Default.
• Navigation. Asset Disposals is in the Fixed Assets app. To show it in another app, add it with Setup → Design Studio → Apps → Manage Items.
• Mobile. No mobile app includes the Fixed Assets app, so disposals are web only.

Common problems

"Fixed Asset GL account is required." or "Accumulated Depreciation GL account is required."

The account is empty. Set it under Chart Of Accounts Details on the record page and post again. The accumulated depreciation account is needed even when Accumulated Depreciation is 0.

"Branch could not be resolved. Please ensure the disposal or its linked asset has a Branch set."

The disposal has no Branch. Despite the message, the asset's branch is not used. Set Branch on the disposal. Where Branch is hidden, ask an administrator to set Branch on the fixed-asset GL account, then choose the account on the disposal again.

"Partner Account (owning company) is required. Ensure it is set on the disposal or on the linked asset's Account."

The disposal has no Company. The asset's account is not used. Set Company on the disposal. Where Company is hidden, an administrator gives the owner a default company on the Company Access tab of Org Settings, and you create the disposal again.

"Purchase cost must be greater than zero."

Enter the asset's original cost in Purchase Cost.

"Gain/Loss GL account is required when disposal value differs from net book value."

The disposal makes a gain or a loss. Set Gain/Loss GL Account and post again.

"Journal does not balance: debits … ≠ credits …"

Two causes:

• Net Book Value was typed and is not Purchase Cost minus Accumulated Depreciation. Clear it, or correct it.
• Disposal Value is above zero but Proceeds GL Account is empty, so the proceeds line is left out. Set the account.

"Party Account is required on lines posting to a control account."

One of the GL accounts, usually the proceeds account, is a control account such as trade receivables. Disposal lines carry no party. Choose a bank, cash or clearing account instead, and invoice the buyer separately if needed.

"GL Account '…' is inactive."

One of the four GL accounts has been deactivated. Choose an active account.

"Fiscal period '…' is Closed — posting is not allowed."

The disposal date falls in a closed or locked period. Ask finance to reopen the period, or change the Disposal Date to a date in an open period.

"Asset disposal '…' is already posted."

The disposal has already been posted. Open its journal from the Journals list. To correct it, see Step 7.

The asset is still depreciating after the disposal

Posting a disposal does not touch the recurring depreciation schedule. Stop the schedule as in Step 6. Reverse any charge posted after the disposal date.

Common questions

Why does xMatix not take the cost and depreciation from the asset?

The disposal is a snapshot you prepare, and the asset record doesn't hold a reliable accumulated depreciation. Depreciation is posted by recurring depreciation schedules, which are linked to the asset by name and never update it, and the asset's Net Book Value is a stored field you maintain. So take Purchase Cost and Accumulated Depreciation from your reconciled fixed-asset register or the depreciation journals, and type them on the disposal. Posting uses exactly what is on the disposal, so check the figures before you select Post Disposal.

Does the disposal invoice the buyer or record the cash?

No. The disposal debits the proceeds to the account you choose and goes no further. When you sell to a customer, either use a clearing account as the Proceeds GL Account and clear it when the buyer pays, or post the proceeds straight to the bank or cash account if you have already received them. Do not use the trade receivables control account, because disposal lines carry no customer. The disposal also posts no GST on the sale; account for any tax on the sale separately.

Can I undo a posted disposal?

Not with one action. Reverse the journal from the Journals list. The disposal stays Posted and can't be posted again, and the asset stays Disposed until you change its Status and Net Book Value by hand. If you still need to dispose of the asset with different figures, create a new disposal. See Step 7.

What do the Draft, Pending Approval and Disposed statuses do?

Nothing. They are values you can choose by hand on the record page, and nothing reads them. Only Post Disposal changes Status, and it writes Posted. No approval process is seeded for disposals, so Pending Approval doesn't hold back posting.

Related topics

• Fixed assets in xMatix
• Assets
• Running depreciation
• Working with journals
• Closing a period
• Asset Disposal entity reference
• Asset — entity reference