Journal Entries for Non-current Assets (Cambridge (CIE) AS Accounting): Revision Note
Exam code: 9706
Journal entries for non-current assets
What are the journal entries for the acquisition of a non-current asset?
The table below shows the journal entries to record the purchase of a non-current asset
Account to debit | Account to credit | |
|---|---|---|
A non-current asset is purchased using cash or money in the bank | Non-current asset | Cash/bank |
A non-current asset is purchased using credit or loan | Non-current asset | Other payables account such as bank loan |
A non-current asset is introduced to the business by the owner | Non-current asset | Capital |
What are the journal entries for the depreciation of a non-current asset?
The table below shows the journal entries to record the depreciation of a non-current asset
The entries are determined by whether the cost model or the revaluation model is used
The cost model always keeps the original cost of the non-current in a separate account
The revaluation model allows the cost of the non-current asset to change
Account to debit | Account to credit | |
|---|---|---|
The depreciation charge at the end of the year using the cost model (straight-line or reducing balance method) | Statement of profit or loss | Provision for depreciation |
The depreciation charge at the end of the year using the revaluation model | Statement of profit or loss | Non-current account |
Examiner Tips and Tricks
Remember, no entries are made in the non-current account for depreciation when using the straight-line or reducing balance method.
What are the journal entries for the sale or disposal of a non-current asset?
The table below shows the journal entries to record the sale or disposal of a non-current asset
Account to debit | Account to credit | |
|---|---|---|
Remove the original cost of the non-current asset | Disposal | Non-current account |
Remove the accumulated depreciation of the non-current asset | Provision for depreciation | Disposal |
Record the sale proceeds | Bank/cash/other receivables account | Disposal |
Transfer to the statement of profit or loss (if a profit is made) | Disposal | Statement of profit or loss |
Transfer to the statement of profit or loss (if a profit is made) | Statement of profit or loss | Disposal |
What are the journal entries for the part exchange of a non-current asset?
The table below shows the journal entries to record the part exchange of a non-current asset
Account to debit | Account to credit | |
|---|---|---|
Remove the original cost of the old non-current asset | Disposal | Non-current account |
Remove the accumulated depreciation of the non-current asset | Provision for depreciation | Disposal |
Record the allowance for the part exchange | Non-current account | Disposal |
Transfer to the statement of profit or loss (if a profit is made) | Disposal | Statement of profit or loss |
Transfer to the statement of profit or loss (if a profit is made) | Statement of profit or loss | Disposal |
Record the payment of the remaining balance of the new non-current asset | Non-current asset | Cash/bank/other payables account |
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