How to Record Vessel Scrapping Proceeds
Recording the sale of a vessel for scrap at the end of its useful life, including the removal of the asset.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Cash at Bank | Asset | 1,200,000.00 | - |
| Accumulated Depreciation - Vessel | Contra-Asset | 8,000,000.00 | - |
| Vessel Asset | Asset | - | 9,000,000.00 |
| Gain on Disposal of Assets | Revenue | - | 200,000.00 |
💡 Accountant's Note
When a vessel is scrapped, the original cost and accumulated depreciation are removed from the books. The difference between the cash received and the net book value is recorded as a gain or loss.
Practitioner & Systems Framework
💻 ERP Architecture
Asset retirement module must be used to calculate net book value at the exact date of sale.
⚠️ Audit Flags
Comparison of scrap value proceeds to market rates for light displacement tonnage (LDT).
📄 Required Documentation
Memorandum of Agreement (MOA), Bill of Sale, and Certificate of Scrapping.
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