UK Fixed Asset to Stock

[greg8290]

Hello, bit of a dilemma!

We are refurbishing an old asset and turning it into a new unit which is the part I have dealt with before. If the old unit has a NBV I move it to then new assets entry on the asset register.

Now my issue is on this occasion is that they want to take some of the parts from the old unit, which in this case has a NBV of zero and add the parts to stock at net realisable value. So I obviously want to debit stock, but what about the credit? In theory I want to decrease the old value of the unit however its fully depreciated and I don't think its right to carry forward a negative NBV into the new asset line.

Any help would be much appreciated on dealing with this entry for tock, thanks.

 

[Kat Maple]

Hi Greg

It is not usual to do something like this. If you must pursue it, you would need to credit an income account, for example. Effectively, you are in a way reversing part of the asset’s depreciation history. As this involves declaring income, I expect this will not be well received by management. Best to leave well enough alone and not record the used part. I would also expect if you record income your auditors will not allow this to stand.

Regards,

Kat