Income or Less Depreciation

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An individual purchased a motor car for Rs. 11 lakhs, and the supplier later credited Rs. 7000 to their bank account without an invoice. The question is whether to reduce the car's value for depreciation purposes to Rs. 10.93 lakhs or depreciate the full Rs. 11 lakhs and treat the Rs. 7000 as income. Advice suggests reducing the asset's value to the net amount if the rebate is considered a discount subsequent to the sale, with depreciation calculated on the adjusted value.

s.kumar

s.kumar (Querist)
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26 April 2020 I have an accounting problem. During FY2019-20, a party had purchased a new motorcar for Rs.11 lakhs in the month of Nov. 19 and paid full amount for the motor car as per bill of Kataria Automobiles.
After taking delivery, Kararia Automobiles returns Rs.7000/- to the party without issuing any invoice for Rs.7000/- only direct credit to party's bank account, after one month.
Now what treatment in accounting must be take??
The motor car value be (Rs.11 lakhs less Rs.7000/-) Rs.10,93,000/- for depreciation or Rs.11 lakhs?
Rs.7000/- as income/Discount received? There is no documents available for Rs.7000/- only bank statement showing Rs.7000/- directly credited through NEFT.
Please advice on the correct accounting actions?

RAJA P M

RAJA P M (Expert)
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26 April 2020 Ask the details to the supplier. Otherwise less the value in the asset and provide depreciation for the value of Rs 10,93,000.

KAVIRAJA ADDANGADI

KAVIRAJA ADDANGADI (Expert)
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27 April 2020 Ask supporting Documents , if it is discount subsequent to sale invoice , it's better reduce value of vehicle since discount amount to capital expenditure.

Depreciation to be worked on net adjusted value of asset.