Mistake in balance sheet for fy 2020-2021

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An auditor's report for FY2020-2021 revealed a mistake where depreciation was recorded in the profit and loss account but not deducted from the laptop's value on the balance sheet. This query seeks guidance on how to rectify this error for FY2021-2022, specifically addressing the opening balance for laptops and the necessary journal entries. The discussion explores options like passing prior period depreciation entries and correcting ledger postings to ensure the balance sheet accurately reflects the asset's value.

ARUN GUPTA

ARUN GUPTA (Querist)

01 March 2022 Our auditor filed audit report for fy 2020-2021 . Depreciation of Rs2000/ shown in profit and loss account but was not deducted from laptop and value of laptop as b/f on 1/4/2020 was shown.
Now for fy 2021-2022 how will we rectify this error? What value of laptop to be shown on 1/4/2021 ? Please clarify?

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

01 March 2022 Opening balance will be after deduction of the depreciation....

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ARUN GUPTA

ARUN GUPTA (Querist)

01 March 2022 But in closing balance depreciation not deducted. How will we match balance sheet?

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

01 March 2022 The balance sheet need not be matched, as it was mistake which needed rectification.

ARUN GUPTA

ARUN GUPTA (Querist)

01 March 2022 What enteries will we have to pass?

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

01 March 2022 Claim depreciation and pass on entry in the opening BS as depreciation pf preceding year.

ARUN GUPTA

ARUN GUPTA (Querist)

01 March 2022 So what rectification entries will we have to pass? Because there will be difference of Rs2000?

ARUN GUPTA

ARUN GUPTA (Querist)

01 March 2022 We will pass dr depricition pv and cr laptop ac. Then how will we close depreciation pv because Rs2000 balance will stand?

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

01 March 2022 That will not be case as the depreciation was not adjusted to laptop account in preceding year.

ARUN GUPTA

ARUN GUPTA (Querist)

01 March 2022 Will that be transferred to profit and loss ac?

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

01 March 2022 Yes, if it was not claimed under depreciation in preceding year.
Even after that it will be disallowed in PY.

ARUN GUPTA

ARUN GUPTA (Querist)

01 March 2022 Could not get yet how to rectify?

CA Rashmi Gandhi

CA Rashmi Gandhi (Expert)

01 March 2022 Just check the amount where the CA transfer that Depreciation, and then pass entry Wrong Ledger A/c. Dr. To Laptop

praveen

praveen (Expert)

02 March 2022 Pass an entry in the current year
Prior Period Depreciation Ac - Dr
To Laptop

Under income tax you wont be able to claim the benefit.

ARUN GUPTA

ARUN GUPTA (Querist)

02 March 2022 And how prior period depriciation A/c will be closed at the ending. Please reply

ARUN GUPTA

ARUN GUPTA (Querist)

03 March 2022 Cash ac was credited instead of laptop ac last year so now cash ac will be debited and prior period depreciation ac will be credited. Please advise

ARUN GUPTA

ARUN GUPTA (Querist)

03 March 2022 How will we correct the above error?

CA Rashmi Gandhi

CA Rashmi Gandhi (Expert)

04 March 2022 Cash A/c Dr
To Laptop A/c.

Depreciation a/c is properly debited so nothing to do.

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