Selling an Asset
ERPNext allows you to sell a fixed asset directly from the Asset record. During the sale, ERPNext automatically creates the required accounting entries to remove the asset from the books, record accumulated depreciation, and recognize any gain or loss on disposal.
To sell an asset, open the required Asset and click the Sell Asset button. ERPNext automatically creates a Sales Invoice linked to the asset.
In the Sales Invoice, enter the required details such as:
- Customer
- Posting Date
- Payment Due Date
- Taxes and other charges (if applicable)
Once the Sales Invoice is submitted, ERPNext automatically records all accounting entries related to the disposal of the asset.
1. Steps to Sell an Asset
- Open the Asset record.
- Click Sell Asset.
- Review the automatically created Sales Invoice.
- Enter the Customer and Payment Due Date.
- Update any additional information if required.
- Save and Submit the Sales Invoice.
2. Accounting Entries
When the Sales Invoice is submitted, ERPNext automatically performs the following accounting entries:
| Account | Entry | Description |
|---|---|---|
| Receivable (Debtors) | Debit | Records the amount receivable from the customer. |
| Fixed Asset Account | Credit | Removes the original cost of the asset from the books. |
| Accumulated Depreciation Account | Debit | Reverses the depreciation accumulated on the asset. |
| Gain/Loss on Asset Disposal Account | Credit or Debit | Records the profit or loss arising from the sale. |
3. Gain or Loss on Disposal
ERPNext automatically compares the asset’s net book value with its selling price.
- If the selling price is greater than the net book value, a Gain on Disposal is recorded.
- If the selling price is lower than the net book value, a Loss on Disposal is recorded.
The account used for recording gains or losses can be configured in the Company master.
4. After Selling an Asset
After the Sales Invoice is submitted:
- The asset is removed from the Fixed Asset Account.
- Accumulated depreciation is reversed.
- The customer receivable is created.
- Any gain or loss on disposal is recorded automatically.
- The asset is treated as disposed and is no longer available for normal asset transactions.
