Fixed Asset Book Twice in FY 2021-2022

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This query is : Resolved

SIDDHARTH MAHESHKUMAR SHAH (Querist)

17 September 2024 The matter is as below:

In an Charitable Organization, one fixed asset of Rs. 10 lacs is booked twice in FY 2021-2022. So one amount can be reversed in now as it was twice booked. Depreciation is charged on both amount from FY 2021-2022

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

12 August 2025 Got it! Here’s how you can handle the situation where a fixed asset of ₹10 lakhs was booked twice in FY 2021-22, and depreciation was charged on both entries:
Step 1: Reverse the Duplicate Asset Entry
Since the asset was booked twice, you need to remove the duplicate asset from your books.
Journal Entry to reverse duplicate asset:

Fixed Asset Account Dr. ₹10,00,000
To Asset Reversal / Suspense Account (or Correction Account) ₹10,00,000
(This reverses the duplicate asset addition.)
Step 2: Adjust Depreciation Charged on Duplicate Asset
Depreciation was charged on the duplicate asset as well, so you need to reverse the excess depreciation.
Suppose the depreciation charged on the duplicate asset for FY 2021-22 and FY 2022-23 is:

FY 2021-22 depreciation (e.g. 10%) = ₹1,00,000
FY 2022-23 depreciation = ₹1,00,000
Total excess depreciation = ₹2,00,000
Journal Entry to reverse excess depreciation:

Depreciation Expense Account Dr. ₹2,00,000
To Accumulated Depreciation Account ₹2,00,000
(This reverses the excess depreciation charged.)
Step 3: Adjust Opening Balances for the Current Financial Year (if applicable)
If you are correcting in the current FY (say 2024-25), and depreciation was charged in the earlier years, you may need to:
Adjust retained earnings / reserves if the error is material, as per Accounting Standard (AS) 5 or Ind AS 8 for prior period errors.
Disclose the nature of error and correction in financial statements.

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