Depreciation

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SATISH MADYAPGOL (Querist)
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26 December 2012 Sir,
I have a Car.
Book Value of this car is Rs.250860 as on 01/04/2012.
I purchased new car for Rs.1043722 on 21/11/2012 & Sold old car for Rs.150000 on 11/12/2012.
Sold value of Old car is including Vat i.e. net sale amount Rs.13333 + vat@12.5% Rs.16667
I am confused about depreciation.
How much Depreciation can be taken in this case?
How much amount should be credit to car account?
Please reply.
Thanks.

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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27 December 2012 According to the Income tax act depreciation shall be computed as follows.

On Rs.150860(i.e 250860-150000) charge full rate of depreciation and on Rs.1043722 charge half rate of depreciation.

And in your books credit to the car account Rs.150000 as sale of car and Rs.150860 as loss on sale of car and charge to the P&L Account. and debit the depreciation amount on Rs.1043722 at half rate of depreciation.

In case you are company assesseese then in your books you should charge depreciation for the sale car upto date of sale and credit to car account such depreciation amount as depreciation and difference amount of sale amount to WDV as on sale of car date is write of as loss on sale of car. For new purchased car charge depreciation from the date of purchase to the end of the year and credit to car account as depreciation. The depreciation rates shall be consider as per the company act rates and followed by you and method of depreciation following by you.

Is you under stand then okay other wise please post the following details:

1) Type of assessee
2) Rate of depreciation
3) Method of Depreciation

I will compute you and give clarification and suggest necessary entries and how to pass etc....

OM SAI SRI SAI JAI JAI SAI

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SATISH MADYAPGOL

SATISH MADYAPGOL (Querist)
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28 December 2012 Sir,
Thank you very much.......!

1) My Type of assessee is INDIDUAL
2) Rate of Depreciation is 15%

how much is Debit amount to car a/c (for sold car)? is it Rs.150000 or Rs.133333

please clarify

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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29 December 2012 You have to credit to sold of car account Rs.13333 and Rs.16667 to Vat Input account.

And for the loss on sale of car treatment you have two choices.

Choice 1: If you want to your books WDV same as per IT Act then do not nothing i.e the loss don't transfer to P&L Account as well as at the end of the year credit depreciation as per IT Act.

Choice 2: If you want then transfer the loss to P&L account and charge depreciation only on new car and credit to car a/c.

Are understand okay. After i will provide you with clear entries because of at this time i am little bit busy. so i explained you brief only.

If you want detail entries i will provide you later.

OM SAI SRI SAI JAI JAI SAI

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