Mutual funds/shares stocks accounting

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This query is : Resolved

Akash Unadkat (Querist)

16 November 2014 If i buy Shares/ Mutual fund Units for Rs. 1000 on 01.04.2013,
Market Value of it on 31.03.2014 Rs. 1200,
I sell it on 30.04.2014 for Rs. 1250.

How can accounting be done ???

(1) Ans 1:
on 31.03.14
Income Receivable Dr. 200 [Current Assets]
Income Cr. 200 [P & L A/c.]
>> and Investment Shown in B/S at Cost on 31.03.14.

On 30.04.2014
Bank Dr. 1250
Investment Cr. 1000
Income Receivable Cr. 200
Income Cr. 50

(2) Ans 2: on 31.03.14
Investment Dr. 200 [Investments]
Income Cr. 200 [P & L A/c.]
>> and Investment Shown in B/S at Market Value on 31.03.14.

On 30.04.2014
Bank Dr. 1250
Investment Cr. 1200
Income Cr. 50

Correct Ans is any of Above, or Any Else ??
Please Suggest me.
- Akash Unadkat

Amol S Joglekar

Amol S Joglekar (Expert)

18 November 2014 No need to account for the market value as on 31/03/2014. (Conservative principle.)
Pass the entry on 30/04/2014 itself.
.
.
The market value of the shares/mutual fund can be reported by way of foot note.

Akash Unadkat

Akash Unadkat (Querist)

23 November 2014 But if it would be for many years, like 5-10 then what ?? after 5-10 years, there will be much big figure of income, and pay higher tax.
where in actual its is collected amount for 5-10 years investment.

Amol S Joglekar

Amol S Joglekar (Expert)

23 November 2014 Shares : It will go to Long Term Capital Gain
(I think you are aiming at MARKET value method of accounting. It is NOT yet recomended in India)Your views please.