How to remove an Asset in exchange for Bartering Services - The Book-keepers Forum (UK)

MamaMia · Newbie

How to remove an Asset in exchange for Bartering Services

gbm · Guru

Hi Z.

Assuming a calendar y/e, I would charge dep'n. You don't need to adjust the invoice, as the MAC was purchased.

Re the barter exchange, there will be a profit on disposal, as the barter value is the same as the original cost. You should process a sales invoice for the MAC and a purchase invoice for the web design. I presume that these have been done, the only difference is that no cash has changed hands. The invoices should then be contra'd, as they equal each other.

Hope this makes sense.

MamaMia · Newbie

Hi Nick
Thanks for your reply.
Indeed, there is a sales and purchase invoice. Although, I'm still not sure how to remove the Asset from the Balance Sheet?

gbm · Guru

Hi Zena,

The sales invoice removes the asset - effectively you are selling an asset.

Rhianrach · Expert

MamaMia wrote:

Hi Nick
Thanks for your reply.
Indeed, there is a sales and purchase invoice. Although, I'm still not sure how to remove the Asset from the Balance Sheet?

I don't know if it's what you are looking for but

Charge the depreciation (dependant on how you want to depreciate the computer)
Debit depreciation
Credit Provision for deprecition

Disposal
Credit fixed asset
Debit disposals

Debit provision for depreciation (for the depreciation so far)
credit disposals

Debit web design services (whatever nominal that may be)
credit disposals (the value of the exchange)

If you have profited as it sounds like you have as you have a service for 1700 euros paid for an asset of less value then

Debit disposals
Credit Profit and loss

This clears the original asset and replaces it with either another asset or clears the asset and the full value of the services could be shown as an expense in full.

Not overly sure if this is the right way to be honest but it seems to work in theory.

MamaMia · Newbie

Thanks Steve - this worked perfectly.