Question

What is the journal entry to record transfer of asset from one company to another company? Is the journal entry for transfer of an asset different from disposal of an asset?

Answer 1

Journal for transferring asset from one company to another is as follows

Accumulated depreciation $xxxxx

Subsidiary account                                          $xxxxx

                Asset Account $xxxxx

(Asset transferred to another company)

If asset is transferred to another Company in case of a merger or acquisition, journal entry would be

Accumulated depreciation $xxxxx

XYZ Company*                                                 $xxxxx

                Asset Account $xxxxx

(Transfer of assets)

*Other company’s name is assumed. Students can take any other name they like.

Yes a transfer of asset and disposal of asset is different

Differences are given below

Transfer	Disposal
Generally done at the time of merger, acquisition etc	Disposal is done generally when asset is not usable or another Asset is purchased as substitute.
No gain or loss account is involved in this transaction	When asset is disposed off , Gain account is credited or loss account is debited with the difference of carrying value of asset and sale consideration.
Cash is not received at the time of transfer.	Cash is received at the time of disposal or sale. Sometimes accounts receivable may also be debited which is converted into cash afterwards.

Journal entry in case of Disposal of asset

Cash $xxxx

Accumulated depreciation $xxxx

Loss on sale of asset $xxxx

                      Asset $xxxx

(Asset disposed)