Accounting treatment for proprietorship business

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Querist : Anonymous

Querist : Anonymous (Querist)

13 May 2017 hello Experts,

Can the below mentioned treatment in Balance Sheet is sound for any Proprietorship Business (No tax audit):

Liabilities:

Opening Capital 20,00,000
Add: Current Year profit: 4,00,000
Less: Loss on Sale of Part Business: (3,00,000)
Less: Loss on Sale of Fixed Assets : (20,000)
Less: Drawings : (10,00,000)
__________ 10,80,000

Loss on Sale of Part Business : Assessee has sold his major loss making unit.
Loss of sale of FA : Assessee has also sold some of its depreciable assets at a loss (i.e below its wdv)

Now i need your advice on this, can we show these losses in balance sheet like this ?
As if we treat these losses to be in P & L, the same should ultimately affect the capital, with a Current year net loss.

Thanks & Regards,

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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13 May 2017 Show these losses in P&L so that you can claim the loss in the income tax workings.

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Querist : Anonymous

Querist : Anonymous (Querist)

13 May 2017 But Sir, if the person is applying for bank loan, then we can't show the same in the P&L as it would lead to huge losses. The person is willing to take a small loan from the bank

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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14 May 2017 This the right way. But in genuine cases and for a small loan and have no intention to cheat the bank in repayment of loan you can do that.

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Querist : Anonymous

Querist : Anonymous (Querist)

18 May 2017 Thank you so much Sir, for your advice.

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