USA How to account sale of asset w/ section 179 deduction in prior year

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  • 2018-08-01: Purchase asset for $100.00 from bank account.
    • +100.00 balance in Assets > Equipment
  • 2018-12-31: Take Section 179 deduction.
    • -100.00 balance in Assets > Accumulated Depreciation
    • +100.00 balance in Expenses > Depreciation Expense
  • 2022-02-20: Sell equipment at loss for $80 cash
    • +80.00 balance in Assets > Cash
    • +80.00 balance in Income > Sales
How do I reduce the value in Assets > Equipment so that I don't show that I own it anymore?

How do I account for the $20 loss? Or does that matter... since I took the 179 deduction, I can't deduct the loss?

What happens to the value in Accumulated Depreciation? Do I just cancel it against the equipment value?

Thanks.
 

DrStrangeLove

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You didn't have a loss on sale of the equipment; you had a gain. You sold equipment with a book value of zero (because you already recovered the equipment cost from income with the Sec. 179 election) for $80 in cash. And so you'd book the cash you got and the gain you got against the equipment and its corresponding accumulated depreciation:

DR Cash 80
DR Accumulated Depreciation 100
CR Equipment 100
CR Gain on Sale of Asset 80
 
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Perfect. That confirms what I seem to have been able to figure out. The sale amount is all taxable income because I already took the depreciation deduction in the year of purchase. To reduce the value from the asset account to zero, I cancel it against the equivalent amount in accumulated depreciation. Thank you!
 

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