ANSWERS: 3
  • The question needs more clarity as to what type of asset it is. A capital asset or is it part of your inventory. If it is a capital asset, you account for depreciation for the period of use in the accounting year concerned on the capital value of the asset. Depreciation is charged at rates set out by your taxation authorities. If it is part of your investory, you account for the balance held at the end of the accounting period as closing stock.
  • It also could depend on what happens to the asset. Is it turned into another asset that will be sold? Is it in still in the process of being turned into another asset? Do you have costing system in place? But, in general, if the inventory was sold, the value of the inventory sold needs to be expensed as Cost of Good Sold. A typical entry would be: Debit - Cash or A/R for price received from the customer Credit - Sales for the price received Debit - Cost of Good Sold for the value of the assets sold Credit - Inventory for the value of the asset sold
  • Try opening an account sheet with Dt and Cr columns!

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