“Gain/Loss Account on Asset Disposal” will be credited/debited based on gain/loss amount. The Gain/Loss account can be set in Company record. I am confused to wheather to make “Gain/Loss Account on Asset Disposal” under Expenses or Revenue in chart of accounts.
I would probably set it as Revenue, and when preparing the monthly statement move it around in the Chart of Accounts Tree accordingly based on weather it is a gain/loss since there are no seperate accounts for this.
Sale of Asset also needs to be reported in investing activities section of Cash flow. So while creating Cash flow, any gain or loss on the sale of an asset is also included in the company’s net income which is reported in operating activities. To avoid double accounting, you may need to deduct each gain from net income and add each loss to net income in the operating activities section of the cash flow statement. These are adjustments generally made by accountants.
Thanks for the explanation , it does sound a little bit incomplete for the lack of better term. I wonder if most accounting software works this way??
