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Souvik Kumar Ghosh (Querist)
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30 October 2012 A company has given mobile phones to its employees & had made payment for the same & it was capitalised. It recovers the cost of mobile phones from the employees monthly salary & credits the procedes to asset a/c. Is the accounting tratment correct? If not then what should be the accounting treatment?

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CA bhargava

CA bhargava (Expert)
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30 October 2012 As Far as i am concerned the above treatment is correct., but my doubt is would the Mobile phones are owned by the Employees ., as you are collecting the money from them.,
If they own the mobile phones., then there is a need to change the transactions.,

In that case.,
the amount paid for the purchase of phones shold be shown as loans to the employees and should not be shown in the assets of the company., and loan should be decreased as and when u collect the payments from them

Souvik Kumar Ghosh

Souvik Kumar Ghosh (Querist)
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30 October 2012 Awaiting more replies.

CA. Subhash Dangi

CA. Subhash Dangi (Expert)
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30 October 2012 In principle the accounting treatment is correct but it involves lot of accounting entries in respect of purchasing the mobiles and monthly collection from employees.

Further Depreciation should be computed on net cost of mobile based on monthly collection.

The other option for accounting if the cost of mobile handset is less than Rs.5000:

Charge off 100% cost of mobiles to P&L account if each cost of mobile not exceeding Rs.5000/- as depreciation and monthly collection on account of mobile deduction can be credited to same account. By doing this u can avoid multiple entries.

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