Disposal of Fixed Assets
This query is : Resolved
18 October 2010
Cost of Machinery on 1.4.2008 - Rs. 5 lakhs
Depreciation for 2 years - Rs. 2 lakhs
WDV on 1.4.2010 - Rs. 3 lakhs
Sale of Machinery on 1.4.2010 - Rs. 6 lakhs
Q. What will be the accounting implications as per Accounting Starndards ?
a. whether 3 lakhs will be credited to P&L ?
or
b. 2 lakhs will be credited to P&L and 1 lakh to Capital Reserve ?
Depreciation for 2 years - Rs. 2 lakhs
WDV on 1.4.2010 - Rs. 3 lakhs
Sale of Machinery on 1.4.2010 - Rs. 6 lakhs
Q. What will be the accounting implications as per Accounting Starndards ?
a. whether 3 lakhs will be credited to P&L ?
or
b. 2 lakhs will be credited to P&L and 1 lakh to Capital Reserve ?
CMA Ramesh Krishnan
(Expert)
18 October 2010
Rs.3 Lakh need to credit the particular asset
Rs.2 lakh to be credited in P&L account unless you are previously created the revaluation reserve, refer AS-10
Rs.2 lakh to be credited in P&L account unless you are previously created the revaluation reserve, refer AS-10
18 October 2010
but sir what about One lakh which is received over and above the cost of the capital asset ie. 6 lakh - 5 lakh ..
Will it to be credited to Capital Reserve?
Will it to be credited to Capital Reserve?
SANJAY TALATI
(Expert)
19 October 2010
Assuming u are charging depreciation directly to Machinery A/c without creating Depre. Resev, the yearwise entries will be :
In the year of purchase :
Machinery A/c Dr. 5,00,000
To Bank/Party A/c 5,00,000
Year end for charging Deprec.
Depreciation A/c Dr 1,00,000
To Machinery A/c 1,00,000
In the 2nd year
Depreciation A/c Dr 1,00,000
To Machinery A/c 1,00,000
In the year of sell
Bank A/c Dr. 6,00,000
To Profit on sale of Machinery 3,00,000
To Machinery A/c 3,00,000
In the year of purchase :
Machinery A/c Dr. 5,00,000
To Bank/Party A/c 5,00,000
Year end for charging Deprec.
Depreciation A/c Dr 1,00,000
To Machinery A/c 1,00,000
In the 2nd year
Depreciation A/c Dr 1,00,000
To Machinery A/c 1,00,000
In the year of sell
Bank A/c Dr. 6,00,000
To Profit on sale of Machinery 3,00,000
To Machinery A/c 3,00,000
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