FIXED assets

This query is : Resolved

amit kumar (Querist)
Follow

07 July 2008 I want to know the answer for the following question

Suppose 1 machinery amounting to rs. 100000 has been purchased on 01.01.2002 and the W.D.V of the machinery on 31.03.2008 is Rs. 40000 and now this machinery is being sold for Rs. 150000.

Someone says that Rs. 50000 is a capital profit and Rs. 60000 is revenue profit whereas sopmeone contends that Rs. 110000 is a revenue profit . the clarification given by them is that nothing has beemn specified in As-10 that there is capital profit above the historical cost . however one of the expert said that it has also been held by the institute in the journal of june 2000.(copy of journal is not available to me so i am not able to verify the same)

Please reply the same from view points of accounts i.e treatment to be done in the books and dont explain me the GYAN of income tax act and also i request u to give proper backing to ur answer.

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
Follow

08 July 2008 Where the sale proceeds is more than the cost of acquisition the toatal gain, representing the Sale proceeds minus WDV, is split as under:

1.Capital profits= Sales proceeds minus the cost of acquisition and
2.Revenue profits= Cost of acquisition minus WDV.

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