Shubham (Student) (48 Points)
26 June 2021There is an asset whose estimated useful life expires in current year and hence has been written down to residual value. What am I supposed to do with that residual value according to provisions of Companies Act, 2013? Is it to be kept as it is or shall it be written off?
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 26 June 2021
If there is useful life left, no need to account for residual value.
Residual value is 5% of asset cost and should not exceed it.
asset=10000₹ And residual value is five hundred rupees.
this value must be retained in retained earnings when there is no useful remaining life left.
By Retained earnings 500₹
To Fixed Asset account 500₹
CA. Sourav Sarkar
(Chartered Accountant )
(24578 Points)
Replied 27 June 2021
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 27 June 2021
That is correct, but tax people have their own version of reducing ret earning. I don’t understand why. It is the same as written off
Chandravijay Shah
(Sole Proprietor)
(23 Points)
Replied 20 December 2023
Should be written off in 5th or 6th year?
Read more at: https://www.caclubindia.com/forum/treatment-of-residual-value-of-an-asset-at-the-end-of-its-life-576686.asp
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