How to Record Sale of Assets in QuickBooks Desktop and Online?

Recording the sale of an asset is important as it helps to preserve the integrity of your accounting records and ensures compliance with financial reporting standards. 

Using a methodical approach in QuickBooks, you can simply keep track of transaction details, change asset values, and account for the impact on your financial statements. This guarantees accurate and current records, which improves financial management and decision-making.

Why is it important to record depreciation while recording asset sales?

Recording of asset sales begins with the calculation of depreciation. So, first, calculate both depreciation and accumulated depreciation and then start with the journal entry.

Depreciation is important to record as it helps businesses determine the current value of an asset after all the wear and tear incurred during the accounting period.

In accounting, it’s crucial to mark the asset as “inactive” when selling it. All these transactions are recorded in a journal entry that includes the record of gain or loss.

How to record the sale of assets in QuickBooks Desktop?

Part 1: Verify Depreciation and the Accumulated Depreciation

Calculate an asset’s depreciation and accumulated depreciation before selling it. This step is crucial for accurate financial reporting.

1. Access the Fixed Asset Item List:
   • Click on the Lists menu.
   • Select Fixed Asset Item List.
   • Locate the asset to be sold from the list.
2. Enter Depreciation Amount:
   • Double-click on the asset. An “Edit Fixed Asset” window will appear.
   • Enter the depreciation and accumulated depreciation amounts.

Part 2: File for a new depreciation for the car before it is sold.

Record depreciation to reflect the asset’s decreasing value over time. Use a journal entry for this purpose.

1. Create a Journal Entry:
   • Click on the Company menu.
   • Select Make General Journal Entries.
2. Enter Depreciation Details:
   • Set the date of the entry as the day of sale.
   • Debit the Depreciation Expense account.
   • Credit the Accumulated Depreciation account.
   • Enter the unrecorded depreciation amount.
   • Review the details and click Save & Close.

Part 3: Record the Sale of the Asset

Properly recording the sale ensures accurate financial records.

1. Create a Sales Receipt or Invoice:
   • Go to the Customers menu.
   • Select Create Sales Receipts or Create Invoices, depending on the sale type.
   • Choose the customer purchasing the asset.
2. Enter Asset Details:
   • In the Item column, select the fixed asset item.
3. Enter the sale price in the Amount column.
4. Save the sales receipt or invoice.

Part 4: Take the Asset out of the Fixed Asset Ledger

Removing the sold asset from the list ensures accurate asset tracking.

1. Locate the Asset:
   • Go to the Lists menu.
   • Select Fixed Asset Item List.
2. Mark the Asset as Inactive:
   • Right-click on the sold asset.
   • Click on Make Item Inactive.

Part 5: Record the Gain or Loss on the Sale

Recording the gain or loss on the sale of an asset is crucial for facilitating better strategic planning and resource allocation. It is not necessary for the sold asset to be sold at a profit. Sometimes, businesses also sell assets at a loss.

Step 1: Create a Journal Entry for the Gain/Loss

1. Click on the Company menu.
2. Click on Make General Journal Entries.

Step 2: Enter Gain/Loss Details

Put the Gain/ Loss information. [ It will include the following:

1. Date the entry as the day of sale.
2. Debit the Accumulated Depreciation account for the total accumulated depreciation of the asset.
3. Debit the Cash or Bank account for the sale price received.
4. Credit the Fixed Asset account for the original cost of the asset.

Note: If there is a gain on the sale, credit the Gain on Sale of Asset account for the difference. If there is a loss, debit the Loss on Sale of Asset account for the difference.

Step 3: Save and Close

1. Review the entry for accuracy.
2. Click on Save & Close.

How to record the sale of assets in QuickBooks Online?

Part 1: Verify Depreciation and Accumulated Depreciation

It’s important to calculate depreciation and the accumulated depreciation before being able to sell an asset.

1. Access the Chart of Accounts:
   • Log in to QuickBooks Online.
   • Click on the Accounting tab in the left navigation pane.
   • Select Chart of Accounts.
   • Review Depreciation Accounts:
   • Locate accounts for Depreciation Expenses and Accumulated Depreciation.

Part 2: Record Depreciation Before Sale

Another journal entry was used to note down the asset’s depreciation.

1. Create a Journal Entry:
   • Click on the + New button.
   • Select Journal Entry.
2. Enter Depreciation Details:
   • Set the date as the day of sale.
   • Debit the Depreciation Expense account.
   • Credit the Accumulated Depreciation account.
   • Enter the unrecorded depreciation amount.
   • Review the details and click Save.

Part 3: Record the Sale of the Asset

Ensure the sale is recorded properly in a way that reports on changes in asset value.

1. Create a Sales Receipt or Invoice:
   • Click on the + New button.
   • Select Sales Receipt or Invoice, depending on the sale type.
   • Choose the customer purchasing the asset.
2. Enter Asset Details:
   • In the Product/Service column, select the fixed asset item.
   • Enter the sale price.
   • Save the sales receipt or invoice.

Part 4: Delete the Asset from the Fixed Asset Register

The disposal of the sold asset helps in avoiding overstatement of assets.

1. Find the Asset:
   • Navigate to the Gear icon.
   • Select Products and Services.
2. Mark the Asset as Inactive:
   • Locate the sold asset.
   • Click on Edit and mark it as inactive.

Part 5: Accumulate the Gain or Loss on the Sale

1. Record the financial result of the sale.
   • Create a Journal Entry:
   • Click on the + New button.
   • Select Journal Entry.
2. Enter Gain or Loss Details:
   • Set the date as the day of sale.
   • Debit the Accumulated Depreciation account for the total depreciation.
   • Debit the Cash or Bank account for the sale proceeds.
   • Credit the Fixed Asset account for the asset’s original cost.
   • For a gain, credit the Gain on Sale of Asset account. For a loss, debit the Loss on Sale of Asset account.
3. Review the entry and click Save.

Important Tips to Record Sale of Assets in QuickBooks

By properly entering the asset sales in QuickBooks, you will be confident that your financial statements are updated and accurate. Here are some useful tips for recording asset sales:

1. Open a New Account for Sale of Assets

The first step is to create an account in the Chart of Accounts to record revenue from asset sales. Credit transactions in the Fixed Asset account make it easier to categorize particular transactions and thus simplify reporting.

2. Class Tracking is designed to generate detailed reports.

Through QuickBooks’ Class Tracking feature, you can sort your asset sales by various classes, such as departments. This enables you to view sales historically per category or from different perspectives regarding the sale of assets from different subdivisions within the business.

3. Record Depreciation Before Selling an Asset

Make sure you adjust for any amount accumulated from depreciation before selling an asset. Recording depreciation will clarify the financial records and allow you to properly estimate the sale’s effect on the company’s balance sheet.

4. Use “Fixed Asset Item” to sell fixed assets.

QuickBooks has a check called Fixed Asset Item that is suitable for creating and selling fixed assets. This tool assists in controlling the number of ledger entries and adjusting depreciation on the sale to record the correct amount and in compliance with accounting standards.

5. Use the “Other Charge Item” for Recording Property and Vehicle Sales

When dealing with property or even vehicles, you can use the Other Charge Item. This feature enables you to follow through on costs that cannot be grouped under ordinary groups to enhance your financial reports.

6. Open a “Sale of Assets” Account

The company should open a Sale of Assets account to record the money received from sales of its assets separately from other receipts. 

It keeps records of expenses and incomes without complications and is useful when preparing specific financial statements on request.

Conclusion

One of the most important steps in keeping correct financial records is entering the sale of an asset into QuickBooks. Ensure that QuickBooks has all information accurately entered, including the sale price, any accrued depreciation, and the asset’s disposal. A journal entry must be made to remove the asset from the balance sheet and record any profit or loss from the sale.

By taking these actions, you can make sure your records are current and adhere to accounting rules while appropriately reflecting the effect of the asset sale on your financial statements. 

Disclaimer: The information outlined above for “How to Record Sale of Assets in QuickBooks Desktop and Online?” is applicable to all supported versions, including QuickBooks Desktop Pro, Premier, Accountant, and Enterprise. It is designed to work with operating systems such as Windows 7, 10, and 11, as well as macOS.