Hi, I have a question regarding the sale of land. I have an adjusted trial balan

Question

Hi, I have a question regarding the sale of land. I have an adjusted trial balance and information regarding the accounts in the trial balance. My question is regarding the disposal of land. I know that to account for the sale of land Db cash Cr land Cr gain on sale of land. My problem is the carrying amount of the land is included in the other expenses. I don't really understand why it would be, but I have been assured there are no errors in this trial balance. Hope I explained properly and any help would be appreciated.

Explanation / Answer

Debit balance of ledger account ' Land' is represents the carrying amount of the land before disposal.

When we dispose such land If sale value is more than the carrying amount of land, the journal entry is;

Debit: Cash ( sale value of the land )

Credit : Land ( Carrying amount of land )

Credit : Gain on sale of land ( Sale value minus carrying amount )

If sale value is less than the carrying amount.,

Debit: Cash ( sale value of the land )

Debit : Loss on sale of land ( Carrying amount minus sale value)

Credit : Land ( Carrying amount of land )

After disposal jounal entry, the ledger balance of land will be nill and clossed.Therefore, such land will not appear anywhere in the financila statement further.

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