How to remove a van from Fixed Assets

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Joetta Trimble
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Joined: Fri Apr 23, 2004 9:37 am
Location: Mountain View Presbyterian Church
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How to remove a van from Fixed Assets

Post by Joetta Trimble »

We have a ten-year-old van that has been in the Fixed Assets showing a value of $25,000. The finance committee wants it "depreciated" to $0, so that it won't even show up on the Balance Sheet. What would the entry to get this accomplished look like? Thanks for any help!
Joetta

catu32
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Joined: Sat Jan 19, 2008 12:21 pm
Location: Cary Christian Church
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Removal of Van

Post by catu32 »

There are two options from an accounting perspective. First, you will need to decide if the van was deemed fully depreciated before the current year or during the current year. This will have an impact on your entry. I'll present this as Option 1 and Option 2.

Option 1: If you decide that the church van was fully depreciated prior to 2008 then your entry to fully depreciate the asset is a Debit to your equity account (fund balance) and a Credit to your Accumulated Depreciation account related to the church van. This option has no current year impact.

Option 2: If you decide that the van will be fully depreciated during 2008, then you will need to decide how much was depreciated during 2008 (1/10 or $2,500 for example). In this case you would Debit the fund balance for $22,500, Debit depreciation expense for $2,500 and Credit Accumulated Depreciation of the van account for $25,000. In this scenario your current year expense would be $2,500

I wanted to present both options so you see the impact but for simplicity I would just do option 1 and have the entire amount be recorded as if it all happened in the prior years. I hope this helps

Joetta Trimble
Posts: 62
Joined: Fri Apr 23, 2004 9:37 am
Location: Mountain View Presbyterian Church
Contact:

Depreciating a 10-year old Van

Post by Joetta Trimble »

Thank you! Your note was very helpful. I guess what we are doing is writing off the van completely, which is the same as your Option 1. Thanks!
Joetta

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