AS 10 Fixed assets

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Rajat (Querist)
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04 February 2009 If an old Fixed asset (WDV - Rs 5000) exchanged for new machinery (fair market value - Rs 10000)

What will be the accounting treatment?

CA. B.SRINIVASULU

CA. B.SRINIVASULU (Expert)
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04 February 2009 If you have sold one machinery type called x and you are purchasing the same type of machinery x then you should arrive the value like this. New purchase 10000- sold 5000 net cost is 5000.

Fixed Assets 5000
To bank 5000

Rajat

Rajat (Querist)
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05 February 2009 Sir, there is no cash transaction. Simply new asset has been acquired in exchange of old asset.

So the new asset should be recorded in books at which value?

In case recorded at new asset FMV, then how to treat the difference of 5000 Rs. (Will it be deemed to be treated as profit on sale of old asset & Cr to P&L A/c?)

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CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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24 September 2011 New Machinery A/c Dr. Rs. 10,000/-
To Old Fixed Asset Rs. 5,000/-
To Profit on Disposal of Asset Rs. 5,000/-

CA Ravi Sisodia

CA Ravi Sisodia (Expert)
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24 September 2011 according to AS-10 in the case of exchange of assets, value of assets will be taken ---- fair value of assets given up or fair value of assets received which is more clearly evident.

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