How to account Sale of Fixed Asset

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Dilipkumar

Senior Executive

30 Points Posted on 08 November 2024

We purchased a printer for ₹110,000 on May 30, 2018, and depreciation was applied on that asset until now. Last month, we replaced the old printer and purchased a new one. The old printer was valued at ₹30,000 by the buyer, who also sold us the new printer.

The cost of the new printer is ₹118,000, as per the tax invoice issued, but a discrepancy was observed. The seller filed the GST returns with the actual sale value at ₹92,576, whereas the invoice was issued for ₹118,000.

The old machine's purchase cost has been adjusted in the GST returns filed by the seller.

How should I account for the ₹30,000 sale amount in the books? Should I treat ₹25,423 (without tax) as income from the sale of an asset and collect the invoice at the original value? Or what would be the correct process in this regard?

Kindly advise.

Replies (3)

Quick Summary

This discussion addresses how to account for the sale of a fixed asset, specifically an old printer traded in for a new one. It covers the accounting entries required to remove the old asset, record the sale consideration, and calculate any profit or loss. Additionally, it explains the GST implications on the sale of used capital goods and provides guidance on resolving a significant discrepancy between the new printer's invoice value and the amount reported by the seller in their GST returns.

Rama chary Rachakonda

Master in Accounts & high court Advocate

7021 Points Posted on 08 November 2024

Debit the buyer account and credut the seller account with rs 30,000

sabyasachi mukherjee

Profession

19978 Points Posted on 09 November 2024

That is not sufficient

Aashok Kumar Sharma

Finance/Compliance Consultant

77999 Points Posted on 06 November 2026

This is an exchange with two legs, so record both:

• Sale of the old printer (Rs 30,000, which you invoice to the dealer):

– Dr Dealer A/c Rs 30,000 + GST

– Dr Accumulated Depreciation (to date)

– Cr Printer (Old) at cost Rs 1,10,000

– Cr Output GST

– Balancing figure: Cr Profit on sale / Dr Loss on sale (P&L).

• Purchase of the new printer: Dr Printer (New) at full price, Dr Input GST; Cr Dealer A/c.

• Settle the net amount payable to the dealer from the bank.

• GST on the old printer: being a sale of capital goods on which ITC was taken (in 2018), pay the higher of (ITC taken − 5% per quarter since purchase) or tax on Rs 30,000 (Sec 18(6), Rule 44(6)). After 20+ quarters the ITC component is nil, so charge 18% on Rs 30,000. Issue a tax invoice (or the dealer issues a self-invoice if you are unregistered).

• Income-tax: Rs 30,000 reduces the WDV of the computers/plant block (Sec 43(6)). The new printer is added to the block. No separate capital gain unless the block is exhausted.

• A trade-in "discount" is not a correct substitute for invoicing the old asset.