How to avoid debiting the P&L Accounts with Depreciation cha

This query is : Resolved

Basab Roy (Querist)
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04 March 2008 Ours is a Housing Co-Operatives with 145 members. One Member has donated Rs.2.3 Lakh to Buy one Ambulance (Maruti Van). Our Income & Exp. A/c is credited with Interest received against Fixed Deposit i.e., Rs.20,000 per annum. In addition to other expenses if depreciation @ 5% is charged to P & L A/c. a Net Loss figure appears. We have debited the Asset A/c. and credited the Donations A/c. with the cost of Van. Is there any way to credit any Reserve/Liab.Account instead of Donation and adjust the depreciation directly to that Reserve/Liab.a/c and crediting the asset account. This may help us to avoid debiting the P&L Account. What we shall do ? Please suggest. basabroy817@gmail.com

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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05 March 2008 It is not possible, because the donor would also be involved in this and he would have categorically mentioned this as so.

CA. Kirti S. Ganatra

CA. Kirti S. Ganatra (Expert)
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05 March 2008 NO, as per standards and clearity. You must dr. FA and Cr. Donation.

CA Saurabh Maheshwari

CA Saurabh Maheshwari (Expert)
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05 March 2008 YOU SHOULD DEBIT ASSET AND CREDIT DONATION

R.V.RAO

R.V.RAO (Expert)
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05 March 2008 DR.ASSET
CR.DONATION
YOU DID RIGHT.YOU WANT PROFIT?
NOW IF YOU NEED TO AVOID DR TO P&L FOR DEP.WHY NOT POST PONE DATE OF COMMISSINOING OF THE ASSET .
IF YOU TAKE THE DATE OF COMMISSIONING OF ASSET TO NEXT FIN. YEAR, YOU NEED NOT DR. P&L WITH DEP.IN THE CURRENT YEAR.
ALTERNATELY STAGGER ANY OTHER EXP. TO NEXT FIN. YEAR SO THAT YOUR P&L WILL SHOW PROFIT.
ACCOUNTANTS KNOW COOKING WELL .THEY ARE GOOD COOKS.
R.V.RAO

o.velavan

o.velavan (Expert)
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08 March 2008 As per AS10,cost of FA includes Cost of purchase and other incidental expeses incurred to bring the asset to present situation.Here the amount donated to purchase the Van.Hence cost of purchase is clearly known.Hence you cannot avoid the depn.Instead if the party donate the van directly to you ,it that situation we can put any value to car.If possible,you to this alternative viz instead of receiving the amount,you receive the car directly

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