User Support Forum

Our church, the result of the recent merger of two churches, just sold one building and its land for $700,000. The building and land have been listed as fixed assets on our books for a total of $750,000. Since this is a rare event and I have very little experience in accounting I would appreciate advice on how to handle this.
Is the money we received income (crediting an income acct. and debiting a current asset acct)? How do we delete the fixed assets? By using a Fund Balance acct.? Or is there some transaction which links the cash income and fixed asset decrease showing a net $50,000 decrease in assets?
Also we gave away most of the contents of the building. They were several thousand dollars worth of fixed assets on our accounts. How do we write them off?
Thanks in advance for you help.

Bill:

The journal entry you could make is as follows:

Debt Cash $700,000
Debit Loss On Sale 50,000
Credit Land & Bdlg Assets $750,000

The above entry assumes you were not recording depreciation. If you were you would have to remove it. You could also debit directly your fund balance account if you do not want to establish a loss on sale or donated assets account.

You could use the same entry on the contents if you received no cash and instead of crediting land or building, credit the assets you gave away.

Randy,
Thanks for the advice. One question about your reply. What kind of account do I use for the second line, "debit loss on sale." Debiting an asset would increase it but this is a loss. Should I create a Fund Balance account for this so the debit will decrease it? What would I call the account?

The best thing to do would be to create an expense account called loss on sale/disposition so that you could use that account should this happen again. If you ever had a gain on sale, then you would have a revenue account. Then the gain or loss would be identifable on your income statement and flow into the fund balance account. If you debit or credit the fund balance account directly, then nothing would show on the income statement.