Discussion:Accounting Issue
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Discussion Forum Index --> Accounting Questions --> Accounting Issue
| 1 December 2006 | |
| Hello,
How would you book this transaction. We had originally purchased a laptop for internal use and it's being capitalized. Now, one of our customers is willing to buy it from us. We then turned around and invoiced them for the sale of the laptop. | |
| December 1, 2006 | |
| If it wasn't used very much by the company (and it hasn't been reported as a fixed asset on any tax return or detailed schedules), I would just take it off the balance sheet and put it in COGS. | |
| 1 December 2006 | |
| Depends on what industry you are in, but I would agree with Natalie if you are in the business of selling equipment...etc. If not, I would post it to the correct line item...perhaps office expense if you got reimbursed for it and then offset it with the c/r for the purchase? COGS should tie to the type of inventory (if any) your company holds....this is my opinion of course :) | |
| December 1, 2006 | |
| Oh yes. Assuming the company were in the business of selling equipment, etc., then it would go to COGS. If it were a reimbursement, then as Sandy stated, the purchase and sale should offset each other. | |
| 3 December 2006 | |
| Yes. We are in the business of selling equipment but in this case, we originally purchased the laptop for internal use, by booking it to COGS would mean that the initially entry had to be booked to inventory? I agree with Sandy that if we did get cash for it, we should treat it as a normal sale of FA. However, the problem here is that we are billing the customer for the sale, normal debit to AR and credit to Revenue so I'm not sure how this would work. | |
Bottom Line (talk|edits) said: | 4 December 2006 |
| Why not credit FA instead of Revenue? | |
| 4 December 2006 | |
| I agree with Bottom; credit the F/A account instead of revenue and then you can back out the depreciation expense (if you depreciate f/a's routinely). Sometimes though a program will not let you set a credit to a non-revenue account. Depends on the software you are using. But if it will, then this is the easiest fix. If not, then you can put it in dr a/r cr r and then write off the f/a to the COGS account as Natalie suggested. | |
| 28 December 2006 | |
| Yep. I agree with Bottom Line.
Let's see the trail. 1) Reclassify Inventory for resale to Fixed Asset for internal use. 2) Don't forget use tax accounting, depreciation, if any 3) Re-establish "resale" status, DR Inventory, CR F/A (Unwind use tax), Depreciation 4) Then sell in the normal course of business. -RLB (Keeping it broad) | |
| January 4, 2007 | |
| You said you bought the laptop for office use and it's being capitalized. So that tells me the laptop is being depreciated. If this is the case, you would report the sale on Form 4797. The journal entry would be debit to cash for the amount of the sale, credit to the asset account for the original cost, debit to accumulated depreciation for the amount previously deducted as depreciation, and either a debit or credit of the balance to an account called something like "Gain/Loss on Sale of Equipment." This last amount should be the same amount of gain or loss that's reported on Form 4797 when you file the tax return. | |
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