Dispose of a Fixed Asset

Last updated: 2026-07-09 Summary:

• Disposal records the proceeds, splits out VAT, and posts the gain or loss against the asset’s net book value.
• Gain or loss is figured on the net (VAT-exclusive) proceeds, never the gross.
• Disposal is full only — you retire the whole asset — and an already-disposed asset can’t be disposed again.

Fixed Assets is available on plans that include Fixed Assets.

Record the disposal

1. Open the asset from Fixed Assets → Asset Register and click Dispose Asset (needs the dispose permission).
2. Set the Disposal Date and pick a Reason — Sold, Scrapped, Traded-In, or Donated.
3. Enter the Proceeds Amount. Leave it at zero for a scrap or donation with nothing received.
4. When proceeds are above zero, set the VAT flags and pick the Proceeds Account (where the cash or receivable lands):
   • Proceeds are VAT-inclusive — the amount you entered already contains 12% VAT.
   • Subject to output VAT — the sale carries output VAT at all.
5. Review the Gain / Loss Preview, then click Confirm Disposal.

How the proceeds are split

eKapital derives net proceeds, output VAT, and gross from your flags:

VAT treatment	Net	Output VAT	Gross
Not vatable (not subject to output VAT)	= proceeds	₱0	= proceeds
VAT-inclusive	proceeds ÷ 1.12	proceeds − net	= proceeds
VAT-exclusive	= proceeds	proceeds × 12%	net + VAT

Gain or loss = net proceeds − net book value. A positive result is a gain on disposal; a negative result is a loss. Net book value is the asset’s cost less accumulated depreciation through the last posted period.

Confirming the disposal posts the disposal journal entry: it removes the asset cost and its accumulated depreciation, records the proceeds and any output VAT, and books the gain or loss.

Where people get tripped up

• Net book value is a period behind. The preview uses depreciation posted through the last run. If you haven’t depreciated the disposal month yet, run depreciation for that period first so the gain/loss is accurate.
• Wrong VAT flags. VAT-inclusive vs VAT-exclusive changes the net, the VAT, and therefore the gain/loss. Confirm which one your sale documents state before confirming.
• Already disposed. A disposed asset is terminal — the Dispose button disappears and re-disposal is blocked. Partial disposals aren’t supported; you retire the whole asset.
• Closed period. Disposing into a closed accounting period is rejected. Choose an open period.

See also

• Run monthly depreciation
• Depreciation caps and the lapsing schedule
• Tax handling