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M6 - Gross off for the stolen asset

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  • # 118717

Hello everyone,

What amount do we put in the loss of stolen asset when it says not to netoff and there is no depreciation chrged upto the date of stolen asset and only NBV amount is given. Little confusion there, if any one can clear the matter.

 

Thank you very much.

Mehul Dave

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  • # 118718

Mehul said:

Hello everyone,

What amount do we put in the loss of stolen asset when it says not to netoff and there is no depreciation chrged upto the date of stolen asset and only NBV amount is given. Little confusion there, if any one can clear the matter.

 

Thank you very much.

Mehul Dave


 

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  • # 118723

Mehul said:

Mehul said:

Hello everyone,

What amount do we put in the loss of stolen asset when it says not to netoff and there is no depreciation chrged upto the date of stolen asset and only NBV amount is given. Little confusion there, if any one can clear the matter.

 

Thank you very much.

Mehul Dave


 

Hi Mehul

The accounting entries for the disposal of an asset when no monetary proceeds are received (i.e. when an asset is scrapped, given away, lost or stolen) is as follows:

  • Debit the accumulated depreciation account (Balance Sheet) with all the accumulated depreciation to date for the asset
  • Credit the Asset account (Balance Sheet) with the cost of the Fixed asset, and
  • Debit the loss on disposal account (P&L) with the difference, if any, between the above two amounts.

 

You basically use this formula: Profit/Loss on disposal = Proceeds - Net book value. However, there are no proceeds received with scrapped, lost or stolen assets. So, there will be a loss on disposal if the asset is not fully depreciated when it is scrapped/lost/stolen.

 

Example: Asset scrapped/written off - partially depreciated

1) A laptop costing £800 and with £300 accumulated depreciation had to be written off because it was lost.

The NBV is £500 (£800 original cost - £300 accumulated depreciation).

The accounting entry would be:

AccountDebitCredit
Computers   800
Computers Accumulated Depreciation 300  
Profit/Loss on disposal of fixed assets 500  
Total 800 800

 

Example: Asset scrapped/written off - fully depreciated

If the above laptop had been fully depreciated when it was lost/stolen, the entries on disposal would be:

AccountDebitCredit
Computers   800
Computers Accumulated Depreciation 800  
Total 800 800

 

Example: Asset scrapped/written off - nil depreciation

Your original post mentions that no depreciation had been applied at all to date for the asset to date. In that case the NBV is the same as the original costs. So, using the same £800 laptop as example, the entries on disposal would be:

AccountDebitCredit
Computers   800
Profit/Loss on disposal of fixed assets 800  
Total 800 800

 

I hope this helps and answers your query.


 



Edited at 26 May 2020 03:55 PM GMT

  • Member PM.Dip
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  • # 119462

Mehul said:

Hello everyone,

What amount do we put in the loss of stolen asset when it says not to netoff and there is no depreciation chrged upto the date of stolen asset and only NBV amount is given. Little confusion there, if any one can clear the matter.

 

Thank you very much.

Mehul Dave


 Hi Mehul,

 

I see what you mean. Here it presume net book value means the purhcase price as there is no depreciation deducted too date.

So there is no point you provide for depreciation now. Just take full assets to asset disposal accounts in profit & loss and once you receive claim or net realisable value (which would not be in this case, iguess), debit bank and credit asset disposal accounts and you will have net diffrence set off in P&L for the year.

Best regards

 

  • Member PM.Dip
  • 4 posts
  • # 119463

Mehul said:

Hello everyone,

What amount do we put in the loss of stolen asset when it says not to netoff and there is no depreciation chrged upto the date of stolen asset and only NBV amount is given. Little confusion there, if any one can clear the matter.

 

Thank you very much.

Mehul Dave


 Hi Mehul,

 

Take the NBV as loss. Any way there is no depreciatio charged so ultimately it whole of assets value. In your case NBV.

 

Regards

  • Member PM.Dip
  • 4 posts
  • # 119464

Mehul said:

Hello everyone,

What amount do we put in the loss of stolen asset when it says not to netoff and there is no depreciation chrged upto the date of stolen asset and only NBV amount is given. Little confusion there, if any one can clear the matter.

 

Thank you very much.

Mehul Dave


 Hi Mehul,

 

One more thing to clear. Client must provide proof that it has been stolen. Presume it has been reported to authority.

client just can not say it has been stolen and write off.

 

Regards

  • Member PM.Dip
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  • # 119466

Hi, Kaushik

Thank you very much for your reply but the subject is cleared back in May 2020.

 

Kind regards,

Mehul Dave

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