Fixed Assets Gain On Trade In

Posted by Ana Orwel on Tuesday, April 28, 2009

Before explaining what is fixed assets gain on trade in, let us understand that irrespective of nature and type of business, there are two types of assets:

• Current Assets and
• Fixed Assets.

Current assets are those assets which can be easily turned into cash within a period of generally say one year. Fixed Assets are those assets which can be touched, felt and can be seen. The benefits of fixed assets can be derived more than one accounting period i.e. the benefit can be derived for more than 12 months.

Fixed Assets are held by the business for more than one accounting period. Fixed Assets may be of 2 types:
1. Tangible Assets
2. Intangible Assets

Examples of Fixed Assets are: Plant & Machinery, Furniture, Premises, and Vehicles Etc.

When talking about fixed assets gain on trade in, we should calculate the gain on the sale of the particular asset item. In the accounting books of business fixed assets are accounted for at cost value less accumulated depreciation. Therefore gain on the sale of fixed assets is a difference between sales price the business receives for the sale of the asset less net book value of this asset, i.e. the difference between cost and accumulated depreciation.

Find more information on accounting basic including fixed assets accounting.