Recording a Disposal in year ended June 30, 200X
STEPS (you must follow this sequence in order for your General Ledger balances to agree with the amortization tool balances as at June 30, 200X):
- Enter asset and Deferred Capital Contributions-bylaw (DCC) additions for the previous fiscal years into the new version of the Historical Amortization Tool per your audited financial statements.
- Enter the annual (200X) amount of amortization for capital assets and DCC into your General Ledger.
- Enter the annual (200X) journal entry for deemed disposals of assets into your General Ledger.
- Enter asset and DCC additions for the year ended June 30, 200X into the new version of the amort tool that will appear on your June 30, 200X audited financial statements.
- Complete the "Disposal of sites and buildings" journal entry tool that can be downloaded from the Ministry website. This tool will calculate your disposal journal entries to be posted to your General Ledger and related amortization adjustments up to and including June 30, 200X.
- Enter the Disposal journal entry per 5) above into your General Ledger.
- Enter the disposals into the amortization tool. Remove the cost and DCC-bylaw associated with each disposal in the "ORIGINAL YEAR OF ACQUISITION". For example, for a building purchased in 1977 at a cost of $200,000 of which $150,000 was bylaw, you will need to go to year 1977 in the tool and enter a negative $200,000 in the disposal cell for assets and a negative $150,000 for DCC-bylaw buildings.
Your General Ledger (and financial statement) balances at June 30, 200X should now agree with the balances in the amortization tool at June 30, 200X.
Step 7 will adjust the amortization from the year of acquisition of the disposed asset to present in the amortization tool to agree with your General Ledger after posting the disposal journal entry in step 6. You will notice that the annual amount of amort for June 30, 200X also will change in the amortization tool but this adjustment has already been captured in the entry you made in step 6.
The opening balances in the amortization tool from the year in which you entered a disposal to present will no longer agree with your General Ledger for those years. The amortization tool was developed as a tool to calculate amortization journal entries and CURRENT accumulated balances ONLY. Please ensure that you maintain separate accounting to track your opening balances, transactions and closing balances for each asset and DCC account. The amortization tool should be used as support for your journal entries.