Journal Entry
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
25 February 2011
An old machinery (worth Rs. 84000) exchanged for a new machinery (worth Rs. 324000) by XYZ ltd payment made 256000
what will be the journal entry for this
what will be the journal entry for this
25 February 2011
It is better to treat both transactions seperate to have correct accounting.
1] For sale of Old Machinery - You have to work out whether there is profit or loss - If profit then Pass following entry :
XYZ ltd. A/c debit (Sale consideration) ,
To Old-Machinery A/c credit (WDV value) ,
To Profit on Sale of Machinery Credit (difference Between Sale VAlue & WDV)
If loss :
XYZ ltd. A/c debit (Sale consideration)
Loss on Sale of Machinery debit (difference Between WDV & Sale Value )
To Old-Machinery A/c credit (WDV Value)
2] For Purchase of New Machinery :
New Machinery A/c Debit Rs. 324000/-
To XYZ ltd credit Rs. 324000/-
1] For sale of Old Machinery - You have to work out whether there is profit or loss - If profit then Pass following entry :
XYZ ltd. A/c debit (Sale consideration) ,
To Old-Machinery A/c credit (WDV value) ,
To Profit on Sale of Machinery Credit (difference Between Sale VAlue & WDV)
If loss :
XYZ ltd. A/c debit (Sale consideration)
Loss on Sale of Machinery debit (difference Between WDV & Sale Value )
To Old-Machinery A/c credit (WDV Value)
2] For Purchase of New Machinery :
New Machinery A/c Debit Rs. 324000/-
To XYZ ltd credit Rs. 324000/-
25 February 2011
agree with Mr.Badamikar
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