How to Calculate the Proceeds in Accounting

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In accounting terms, proceeds commonly describe the funds received from a bond issuance or net gain from selling a fixed asset. Each financial event requires accountants to record a specific transaction. Proper documentation is necessary for each transaction type. Accountants should gather all requisite information by researching and gathering paperwork that supports the recorded transaction. Companies need to retain the information for a period of time suggested by auditors. This allows the company to prove the accuracy and validity of the transaction.

Bond Proceeds

  • Review expenses and fees associated with issuing bonds. These include legal, accounting, underwriting, insurance and commission expenses, among others.

  • Divide the total bond issuance expenses by the total bonds the company plans to issue. This percentage represents the total bond fees.

  • Multiply the bond issuance fee by total bonds issued.

  • Subtract the figure from Step 3 from the total amount of bonds issued. The difference is the net bond proceeds received by the company.

Asset Sale

  • Calculate the carrying value of the asset. Subtract the accumulated depreciation from the asset's historical cost.

  • Subtract the asset's carrying value from the sale price received for the asset.

  • Report the difference from Step 3 as the net proceeds from the asset sale, assuming the sales price is higher than the carrying value. Gains on sale proceeds increase a company's net income.

Tips & Warnings

  • When a company sells an asset whose carrying value is higher than the asset's sale price, the company incurs a loss. A loss will reduce a company's net income.

References

  • "Intermediate Accounting"; David Spiceland, et al.; 2007
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