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How to: Sale of Business Vehicle/Fixed Asset and Pay-off of Business Loan

chanyockertchanyockert Member Posts: 1

I recently sold my business vehicle and paid off the business loan with the proceeds.

Previously, I had created a journal entry for a long-term asset for the vehicle and an account for the business loan under long-term liabilities. The vehicle was not fully depreciated.

How should I categorized the revenue from the sale and the pay-off of the loan? What do I do with the long-term asset - that is, to zero out the asset?

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edited March 31, 2021 in Accounting Technical Support

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    MikegMikeg Member Posts: 995 ✭✭✭

    @chanyockert,
    The normal entry to retire an asset where cash was received (DR=debit CR=Credit)
    DR: Cash (Received)
    DR:Accumulated Depreciation (to date depreciation)
    DR Loan Vehicle (principal balance)
    CR: Asset Vehicle (cost)
    DR or CR Gain or Loss on Sale (Income statement)

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