Partnership firm

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ARVIND JAIN (Querist)
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02 July 2013 A firm sells its property of book value 200000, wdv 10000 for 400000 and buys another property of same value.Capital of two partners 220000/-.How to adjust gains on sale of asset. The wdv shall have no effect as per income tax, but how to adjust in financial statements.Should gains be carried to Capital a/cs and show asset at new purchase value?Please comment.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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08 August 2013 Since there is block of assets concept the gain is to be adjusted in the block and to that extant depreciation whall be reduced. If you calculate the for fianacial statement purpose then you can book the gain and include in Profit which is to be distributed to the partners but while preparing your income tax return in the computation the gain is to be deducted from the profit and also the value of the asset on which you have booked gain is to be reduced for calculation of depreciation as per income tax act and the depreciation as has been claimed in the books to be added for calculation of tax payable. This process is to be folowed in all the years thereafter.

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C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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ARVIND JAIN

ARVIND JAIN (Querist)
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10 August 2013 e.g. w.d.v 100000
sales 400000
purchase 400000
IT w.d.v 100000

300000/- PROFIT C/F TO PARTNER A/C,SAY IF NO OTHER PROFIT/LOSS.HOW TO ADJUST B/S FOR I.T PURPOSE.HOW TO ADJUST 300000/- WILL 300000/-BE DEPRECIATION RESERVE ON ASSET SIDE TO TALLY B/S WITH WDV. ADVICE.

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