Selling an Asset
ERPNext selling a fixed asset is a straightforward process and is integrated directly with the Sales Invoice module so that there is proper accounting treatment and complete transaction traceability maintained. This is particularly useful while disposing of assets either because they have become outdated, had to be upgraded, or were to be liquidated.
How to Sell an Asset
In order to sell an asset:
- Click the Asset record of item that you are selling.
- On the upper right corner of the form, click on the button Sell Asset.
- It will create a new sales invoice form already having the detail of assets in the form.
- In the Sales Invoice form, do the following:
- Customer: Select the buyer of the asset.
- Due Date: Enter the date of payment.
- Add or verify item price information, taxes, and applicable discounts.
- Save and Submit the Sales Invoice to finalize the sale.
Accounting Entries on Asset Sale
The accounting journal entries required to post the accounting impact of the disposal of the asset and financial effect of the same, are created in ERPNext when the Sales Invoice is posted. The following accounts are impacted by it:
Dr. Accounts Receivable (Customer/Debtor) → On the basis of overall sales value of the asset (i.e., on the basis of Sales Invoice).
Cr. Fixed Asset Account → On the basis of original purchase price of the asset (i.e., acquisition cost).
Dr. Accumulated Depreciation Account → On the basis of overall depreciation accounted on the asset up to the date of sale.
Cr./Dr. Gain/Loss on Asset Disposal Account → The system calculates the net gain or loss as a percentage of the difference between:
Sale price
- Net book value (purchase price - accumulated depreciation) → The net difference is debited to the Gain/Loss on Disposal account defined in the Company master in the Fixed Asset Defaults section.
Example: If you purchased a computer for $2,000 and it depreciated by $1,200 in value over time, and you sell it for $900, the net book value would be $800. ERPNext will record a $100 gain on disposal.
Further Notes
- The Asset Status is set to "Sold" automatically on successful invoice submission.
- Depreciation entries beyond this point are inhibited once the asset is sold.
- You can directly link the corresponding Sales Invoice and Journal Entry from the Asset record for audit and reconciliation purposes.