Fixed assets

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

22 May 2014 If a firm purchases a fixed asset worth Rs.10000 on credit recording in the books as:
FIXED ASSETS A/C DR.
TO SUPPLIER'S A/C
Then, at the time of making payment, discount of Rs. 2000 is received. What will be the treatment of such discount?

CA Sumit Arora

CA Sumit Arora (Expert)
Follow

22 May 2014 Dear,
In accordance with the accounting standard Accounting for Fixed Assets', discount of Rs. 2000 is to be deducted from original cost i.e. Rs. 10000 to arrive at the historical cost.
Because it will be deemed to be price adjustments and hence will have to be adjusted from the original cost of fixed asset.
Regards

Nikhil Kaushik

Nikhil Kaushik (Expert)
Follow

23 May 2014 depends, i believe this is a cash discount...so should not be deducted from the cost. only trade discounts and rebates should be considered for deduction.

Querist : Anonymous

Querist : Anonymous (Querist)

24 May 2014 Then sir, what shall be the treatment in this case? what further entry will be passed?

Nikhil Kaushik

Nikhil Kaushik (Expert)
Follow

24 May 2014 just transfer to other incomes....

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now