There 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?
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₹
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
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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