Dispose of or sell an asset
If you have the Adviser user role, record the disposal of a registered asset (including pooled assets) you sold, gave away, or threw out.
Before you start
If your fixed assets start date in Xero is in an earlier financial year, make sure you've run depreciation up to the beginning of this financial year. For example, if your year end is 30 June and you're disposing of a registered asset on 20 August 2016, run depreciation in Xero to 30 June 2016.
Enter the disposal or sale details in Xero
- Go to Accounts, then click Fixed Assets.
- Click the Registered tab.
- Click the asset number.
- Click Options, then Dispose.
- Enter the disposal details.
- Click Show Summary.
- Review the disposal summary. If you change any disposal details, click Update to see the revised disposal summary.
Click Review Journals and review the disposal journal for book depreciation.
- If required, select the accounts to use for gain on disposal, capital gain or loss on disposal.
- Click Post.
Disposal details explained
- Date Disposed - The date you sold the asset. Also used as the journal entry date.
- Sale Proceeds - The tax-exclusive amount you sold the asset for. Enter 0 if you gave away or threw out the asset.
- Sale Proceeds Account - The account used to reconcile the bank transaction for the sale proceeds.
Depreciation for this financial year - Select the option for depreciation for this asset. See the example for an explanation of how Xero processes each option.
- Date - Date used to calculate depreciation if you select All depreciation up to and including in the Depreciation for this financial year field.
- (Pooled assets only) Pool Proceeds - Adjust the amount of the sale proceeds applicable to the pool if the asset has less than 100% business use.
Things to note
- Only the book side of the disposal is included in the journal posted to the accounts. The tax side of the disposal shows in the Tax Disposal Schedule.
- Capital gains are calculated for the book side of the disposal, not the tax side.
If the disposed asset has a cost limit, the sale price is adjusted for the tax side gain or loss, where the adjusted sale price = sale price * (cost limit / purchase price). The tax side gain or loss = adjusted sale price - tax value.
The book side gain or loss = non-adjusted sale price - book value.
If you're disposing of an asset transferred into a pool, and the disposal date is before the pooled date, you'll need to roll back depreciation to the asset's pooled date. The asset is removed from the pool and you can then dispose of it.
If you added the new asset directly to the pool, you don't need to roll back depreciation before disposing of it.
You bought a car for 80,000, with a cost limit of 57,581. After a couple of years the accumulated depreciation on the car is 15,353 and you sell it for 60,000.
- The book value is 64,647 (80,000 - 15,353).
- The tax value is 42,228 (57,581 - 15,353).
- The tax adjusted sale price is 43,186 (60,000 * (57,581 / 80,000)).
- On the book side, a loss on disposal of 4,647 was made (60,000 - 64,647).
- On the tax side, a gain on disposal of 958 was made (43,186 - 42,228).
Actions you may need to take after disposal
After you dispose of the asset, you may need to take further action.
- If you've sold the asset for cash, Xero won't show the disposal on your Statement of Cash Flows report until you create a receive money transaction for the proceeds, or reconcile the cash received in your bank account to the Sale Proceeds Account on the disposal.
- If the pool balance is negative after the disposal, or you dispose of the last asset in a pool, you may need to make a fixed asset pool adjustment.
- If you dispose of a pooled fixed asset before your tax reporting start date in Xero, and the asset was pooled before your tax reporting start date in Xero, you may need to re-enter the pool's opening balances in Xero.