Accounting

This query is : Resolved

Amit Bhausaheb Kadganchi (Querist)
Follow

16 July 2014 Hello,

I just want to confirm that if suppose an entity is following the block of assets system of accounting & particular asset belonging to a block is sold over & above its wdv but later on the another asset belonging to the same block is purchased then whether capital gain arising on 1 st transfer of assets should be trf to profit & loss account or will remain under the same block..

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
Follow

16 July 2014 The capital gain arising on assets sold,will remain under the same block, if the entity is following the block of assets system of accounting.

CA Parul Saxena

CA Parul Saxena (Expert)
Follow

16 July 2014 whatever is the accounting system profit or loss on sale of asset is transferred to profit and loss account.Block is reduced with the WDV (on the date of sale) of the asset sold

Rupesh Jain

Rupesh Jain (Expert)
Follow

16 July 2014 you have to book profit and loss on assets.
and reduce the assets from the block value.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
Follow

17 July 2014 You don't understand the block of assets system of accounting of depreciation for the purpose of tax working. The entire sale value whether it is profit or loss on sale will go to reduce the block value.
Profit or loss on sale of assets entry will be passed in the books of accounts but in the tax working of block of assets, no profit or loss on sale of assets is considered separately.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now