Transactions > Transaction examples - Capital Assets / Assets > Writing off a capital asset
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Writing off a capital asset
You can write off a capital asset when you have no further use for it. For example, a piece of equipment is ready to scrap, a building is being torn down or you’re giving away a vehicle for free.
You’ll need to remove the asset from your books as you can no longer claim ownership. There are two ways to do this.
- If the asset has been a part of the business for many years and can reasonably be assumed to be fully depreciated:
a) In the Transaction Entry dialogue box to book the disposal of the capital asset (use the original purchase price to write it off)
b) Temporarily offset the entry to Miscellaneous Expense depreciated
2. If the asset was purchased fairly recently and isn’t fully depreciated:
a) In the General Journal dialogue box, enter the following to clear the amount in Miscellaneous Expenses
b) Note: You may need your accountant's assistance with this entry. You'll be claiming a capital loss on the disposal, but the actual amount of depreciation that has occurred over the asset's life. In this case, you'd record the entry as follows:
The loss on the asset’s sale is the difference between the original cost of the asset and the total amount of depreciation that has occurred over its life. It can be used to offset any capital gains that have been claimed throughout the year. AgExpert Analyst doesn’t keep track of this number. Your accountant may have to help you calculate it accurately.
Last updated on September 2, 2016 by FCC AgExpert