Accounting for Loss on Sale of Fixed Assets in TallyPrime: 3 Steps

1. Understanding Loss on Sale of Fixed Assets in TallyPrime

When a fixed asset is sold for a price lower than its book value (original cost minus accumulated depreciation), a loss is incurred.

This loss needs to be recognized in your financial records.

2. Steps to Record the Loss on Sale of Fixed Assets in TallyPrime:

1. Create a Sales Invoice:

• Go to Gateway of Tally > Vouchers > Press F8 (Sales).
• Enter the buyer’s details.
• Add the fixed asset to the invoice, specifying the selling price.

2. System Calculation:

• TallyPrime will automatically calculate the net book value of the asset based on its original cost and accumulated depreciation.
• It will also calculate the loss on the sale.

3. Record the Journal Entry:

• TallyPrime will generate a journal entry to record the sale:
  • Debit: Sales Account (for the selling price)
  • Credit: Fixed Asset Account (for the net book value)
  • Debit: Profit and Loss Account (for the loss amount)

3. Example of Loss on Sale of Fixed Assets in TallyPrime:

Suppose you purchased a machine for Rs. 10,000. After 2 years of depreciation, its book value is Rs. 8,000. You sell the machine for Rs. 6,000.

1. Create a Sales Invoice:

• Enter the buyer’s details.
• Add the machine with a selling price of Rs. 6,000.

2. System Calculation:

• TallyPrime will calculate the net book value as Rs. 8,000.
• It will also calculate the loss as Rs. 2,000 (net book value – selling price).

3. Journal Entry:

• Debit: Sales Account – Rs. 6,000
• Credit: Fixed Asset Account – Rs. 8,000
• Debit: Profit and Loss Account – Rs. 2,000

4. Key Points:

• Accumulated Depreciation: Ensure that the accumulated depreciation for the fixed asset is up-to-date.
• Tax Implications: Consider any applicable taxes on the sale of the fixed asset.
• Financial Reporting: The loss on the sale of the fixed asset will be reflected in your income statement.

By following these steps, you can accurately record the loss on the sale of fixed assets in TallyPrime, ensuring that your financial records are up-to-date and compliant with accounting standards.