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FaithAirSun
Level 2

How do I write off the depreciation for assets when a business has been sold and is closing?

The business I am working with has been sold and I need to update the chart of accounts to zero out the depreciation accounts for vehicles that were sold last year. How exactly do I do that?
4 Comments 4
LeizylM
QuickBooks Team

How do I write off the depreciation for assets when a business has been sold and is closing?

Hi there, FaithAirSun.

 

I can show you how to update the chart of account to zero out the depreciation account for vehicles in QuickBooks Online.

 

You’ll need to create a Journal Entry to record the amount of the loan to the proper accounts.

  1. Choose Plus Sign (+)  then click Journal Entry.
  2. For the first line under the Account column, select the new liability account.
  3. To the right of the liability account under the Credit column enter the amount of the loan.
  4. For the second line under the Account column, select the appropriate asset account.
  5. To the right of the asset account under the Debit column enter the amount of the loan.

To ensure your records are accurate, I suggest consulting an accountant before performing the process. They can provide suggestions on how to properly handle the account, especially with the category to use for the debit and credit.

 

I'm just one post away if you need a hand with your QuickBooks account. I'll be here to ensure your success. You have a good one. 

Rainflurry
Level 13

How do I write off the depreciation for assets when a business has been sold and is closing?

@FaithAirSun 

 

Were there loans on these vehicles?  Was depreciation booked up until the day of the sale or were they fully depreciated?  This is generally not something you want to try and do yourself - it's best to consult a CPA.  Here's an example of a journal entry for a vehicle without a loan and with up-to-date depreciation:

 

 DebitCredit
Cash (sale price of vehicle)XXX 
Accumulated Depreciation (account balance)XXX 
    Vehicle (cost on balance sheet) XXX
Gain/(loss) to balance - debit if loss, credit if gain.  

 

Jessica_young
Moderator

How do I write off the depreciation for assets when a business has been sold and is closing?

Good morning, @FaithAirSun.

 

When it comes to delicate matters like this, we recommend consulting an accountant. That way, you can be sure you're doing the right thing for your business.

 

There are a number of accountant users in this community that may be able to give insight into this situation. QuickBooks can also help you find an accountant familiar with the program through our Find a ProAdvisor website. Simply type in your postal code, hit the Find a ProAdvisor button, and then use begin your search. 

 

I wish you all the best and I'm here if you have any other questions about QuickBooks

 
FaithAirSun
Level 2

How do I write off the depreciation for assets when a business has been sold and is closing?

The vehicles were paid off prior to them being sold. The owner got cash for one of them then the other one was included in the sale of the business. Our CPA told me to zero them out but not what to post them to.

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