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Non-current asset accounts, disposals and the schedule

Edexcel IAL Accounting · WAC11 The Accounting System and Costing

Non-current assets are kept at cost in one account, with depreciation built up in a separate accumulated depreciation account. When an asset is sold, a disposal account works out the profit or loss. A schedule summarises the year (spec 1.1.16, 1.1.19 and 1.1.20).

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The accounts

Asset account (e.g. Vehicles at cost): debit cost when bought; stays at cost.
Accumulated depreciation account (provision for depreciation): credit the charge each year (debit statement of profit or loss). It builds up as a credit balance.
Statement of financial position: cost - accumulated depreciation = carrying value.

Depreciation policy matters: for example 'a full year in the year of purchase and none in the year of sale', or time-apportioned monthly. Always follow the policy given.

The disposal account

1. Debit Disposal, credit Asset account: cost of the asset sold.

2. Debit Accumulated depreciation, credit Disposal: depreciation on that asset to date.

3. Debit Bank (or the buyer), credit Disposal: proceeds. In a part-exchange, the trade-in allowance is the proceeds: debit the Asset account (as part of the new asset's cost), credit Disposal.

4. The balancing figure is the profit (a debit balance needed, credited to the statement of profit or loss as income) or loss (credit balance needed, debited as an expense).

Debit	£	Credit	£
Vehicles (cost)	24,000	Accumulated depreciation	10,500
		Bank (proceeds)	12,500
		Statement of profit or loss (loss)	1,000
	24,000		24,000

Disposal account: loss £1,000

Schedule of non-current assets

A schedule shows, for each class of asset, how cost and depreciation moved in the year.

Equipment	£
Cost at start of year	80,000
Additions	20,000
Disposals	(15,000)
Cost at end of year	85,000
Accumulated depreciation at start	32,000
Charge for the year (10% of cost at end)	8,500
Depreciation on disposals	(9,000)
Accumulated depreciation at end	31,500
Carrying value at end of year	53,500

Worked example

A vehicle bought on 1 January 2023 for £24,000 is depreciated at 25% reducing balance, with a full year in the year of purchase and none in the year of sale. It is sold on 1 July 2025 for £12,500. Find the profit or loss on disposal.

2023: 25% x 24,000 = 6,000. 2024: 25% x 18,000 = 4,500. No charge in 2025 (year of sale).
Accumulated depreciation = 10,500; carrying value = 13,500.
Proceeds 12,500 - carrying value 13,500 = (1,000).

Answer: Loss on disposal £1,000, debited to the statement of profit or loss.

Key idea: Disposal account: debit cost; credit accumulated depreciation and proceeds; the balancing figure is the profit or loss. Follow the depreciation policy for the years of purchase and sale.

Check yourself

A machine cost £30,000 and has accumulated depreciation of £21,000. It is sold for £10,400. Find the profit on disposal.
Show answer
£1400. Carrying value 9,000; profit = 10,400 - 9,000 = 1,400.
Equipment costing £12,000 was bought on 1 April 2023 and depreciated at 20% a year straight line, time-apportioned monthly. The year ends on 31 December. It was sold on 30 September 2025. Find the accumulated depreciation at the date of sale.
Show answer
£6000. Annual charge 2,400. Months owned: 9 (2023) + 12 (2024) + 9 (2025) = 30. 2,400 x 30/12 = 6,000.
Vehicles at cost were £60,000 at the start of the year. A vehicle costing £18,000 was bought and one costing £11,000 was sold. Accumulated depreciation was £25,000 at the start; the charge for the year was £12,000 and depreciation on the vehicle sold was £7,500. Find the carrying value of vehicles at the end of the year.
Show answer
£37500. Cost 67,000; accumulated depreciation 29,500; carrying value 37,500.
On disposal, how is the accumulated depreciation on the asset sold recorded?
- Debit Disposal, credit Accumulated depreciation
- Debit Accumulated depreciation, credit Disposal
- Debit Accumulated depreciation, credit Asset account
- Debit Statement of profit or loss, credit Accumulated depreciation
Show answer
Debit Accumulated depreciation, credit Disposal. The depreciation is removed from its account and set against the cost in the disposal account.
An old van is part-exchanged for a new van. The garage allows £5,000 for the old van. How is the £5,000 recorded?
- Debit Disposal, credit Vehicles
- Debit Bank, credit Disposal
- Debit Disposal, credit Bank
- Debit Vehicles, credit Disposal
Show answer
Debit Vehicles, credit Disposal. The allowance is the proceeds of the old van and part of the cost of the new one.
A disposal account shows a debit balancing figure. This means
- a loss on disposal, debited to the statement of profit or loss
- a profit on disposal, credited to the statement of profit or loss
- the asset was sold for less than its carrying value
- depreciation was undercharged by the bank
Show answer
a profit on disposal, credited to the statement of profit or loss. A debit balancing figure is needed when proceeds plus depreciation exceed cost: a profit.

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Sources

Pearson Edexcel International Advanced Subsidiary/Advanced Level in Accounting specification (issue 2), Unit 1 and Appendices 6 to 8

Last updated 8 November 2026. Spotted a mistake? Tell us.