Depreciation and balance sheet

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

14 November 2012 Dear Sir,
Suppose opening balance of capital is Rs. 10 lacs and net profit is Rs. 2 lacs, thus the total of liability side comes to Rs. 12 lacs.
On the other hand Plant WDV is Rs. 10 lacs and depreciation charged thereon is Rs. 1.5 lacs @15%, and balance value of plant comes to Rs. 8.5 lacs and cash in hand is Rs. 2 lacs, thus the total of assets side comes to Rs. 10.5 lacs. Therefore the assets side is less than liability side by Rs. 1.5 lacs, due to charging of depreciation. How to make equal both sides.

Please advise me.

CA Dileep Surya Kumar

CA Dileep Surya Kumar (Expert)
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14 November 2012 Seems you have not charged depreciation to profit otherwise profit would have been reduced by 1.5 lacks for depreciation. Please charge depreciation.

Querist : Anonymous

Querist : Anonymous (Querist)

14 November 2012 I have already charged depreciation in P&L a/c. Should I increase cash in hand by Rs. 1.5 lacs or I should make a entry in assets side in the name of provisions by Rs. 1.5 lacs.

Please clarify.

CA Dileep Surya Kumar

CA Dileep Surya Kumar (Expert)
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15 November 2012 You have already deducted the depreciation from the plant value.

If you are not maintaining proper accounts , then increase cash balance to the extent as there is no other alternative.

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