Depreciation under companies act 2013

This query is : Resolved

PANKAJ KUMAR SRIVASTAVA (Querist)
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11 June 2015 RESPECTED SIR,
THE ORIGINAL COST OF PLANT AND MACHINERY IS RS.100.00 LAC RESIDUAL VALUE RS.5.00 LAC.AS PER SCHEDULE II OF COMPANIES ACT 2013 THE USEFUL LIFE OF ASSET HAS ALREADY EXPIRED IN F.Y.2013-14. W.D.V OF ASSET AS ON 01.04.2014 AS PER SCHEDULE XIV OF THE COMPANIES ACT 1956 IS RS 18.00 LAC.
SIR, IF WE CHARGE DEPRECIATION FULL AMOUNT OF W.D.V RS.18.00 LAC, THE COMPANY WILL INCURR HEAVY BOOK LOSS
SIR, PLEASE GUIDE ME HOW THE ACCOUNTING ENTRIES OF DEPRECIATION,DEFERRED TAX ASSET/LIABILITIES AND RETAINED EARNINGS WILL BE PASSED IN THE BOOKS

WITH REGARDS

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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11 June 2015 No adjustment will be carried out in the current year and the profit for 2014-15 will not be affected.
Pass entry debiting retained earnings (reserves) retaining 5% residual value – Note 7b of the schedule.
Pass entry for deferred tax asset/liability and adjust it against retained earnings.

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PANKAJ KUMAR SRIVASTAVA

PANKAJ KUMAR SRIVASTAVA (Querist)
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11 June 2015 RESPECTED SIR,
PLEASE PROVIDE JOURNAL ENTRY OF DEFERRED TAX ASSET/LIABILITY

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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11 June 2015 It is for deferred tax liability.
Reserves and surplus Dr
To deferred tax liability Cr
I think now you will pass the entry for deferred tax asset.

PANKAJ KUMAR SRIVASTAVA

PANKAJ KUMAR SRIVASTAVA (Querist)
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11 June 2015 RESPECTED SIR,

1. RESERVE & SURPLUS DR. 13.00 LACS
TO DEPRECIATION RESERVE 13.00 LACS
(BEING AS THE USEFUL LIFE HAS ALREADY EXPIRED KEEPING 5% RESIDUAL VALUE W.D.V AS ON 01.04.2014 WRITTEN OFF RS.18.00 LACS- RS.5.00 LACS)

SIR WHAT WILL BE THE NEXT ENTRY ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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12 June 2015 The entry is leaving 5 lacs for residual value:
Reserves & surplus Dr 13 lacs
To Depreciation reserve Cr 13 lacs

You work out and tell me quantum of deferred tax liability/asset.

PANKAJ KUMAR SRIVASTAVA

PANKAJ KUMAR SRIVASTAVA (Querist)
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12 June 2015 SIR,
I AM CONFUSED TO CALCULATE DEFERRED TAX ASSET/LIABILITY.
PLEASE PROVIDE JOURNAL ENTRY OF DEFERRED TAX ASSET/LIABILITY
WITH REGARDS

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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12 June 2015 You tell me it is a deferred tax asset or liability then I will tell the entry.

PANKAJ KUMAR SRIVASTAVA

PANKAJ KUMAR SRIVASTAVA (Querist)
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12 June 2015 SIR,
IT IS A DEFERRED TAX ASSET

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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13 June 2015 The entry:
Deferred tax asset Dr
To Reserves and surplus Cr

PANKAJ KUMAR SRIVASTAVA

PANKAJ KUMAR SRIVASTAVA (Querist)
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13 June 2015 SIR,
RS.13.00 LACS HAS BEEN DEBITED TO DEFERRED TAX ASSET WHILE ONLYCURRENT TAX @ 30.9% SHOULD BE DEBITED TO DEFERRED TAX ACCOUNT

PANKAJ KUMAR SRIVASTAVA

PANKAJ KUMAR SRIVASTAVA (Querist)
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16 June 2015 SIR,
PLEASE PROVIDE STEP BY STEP JOURNAL ENTRY WITH FIGURE
WITH REGARDS

PANKAJ KUMAR SRIVASTAVA

PANKAJ KUMAR SRIVASTAVA (Querist)
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16 June 2015 SIR,
PLEASE PROVIDE STEP BY STEP JOURNAL ENTRY WITH FIGURE
WITH REGARDS

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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16 June 2015 Only 30.90% on 13 lacs has to be debited to deferred tax asset ac.

PANKAJ KUMAR SRIVASTAVA

PANKAJ KUMAR SRIVASTAVA (Querist)
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17 June 2015 SIR,
FIRSTLY WE WILL DEBIT TO RESERVE & SURPLUS BY RS. 13.00 LAC AND THEREAFTER WE WILL CREDIT TO RESERVE AND SURPLUS BY RE.13.00 LAC IT MEAN THERE IS NO IMPACT ON RESERVE & SURPLUS

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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18 June 2015 We will credit only 4.017 lacs (13*30.90%).
Credit entry passed only for the tax effect.

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