Perqs.on use of movable assets
This query is : Resolved
10 January 2013
Hi,
My query is regarding perqs.valuation on use of Movable Assets
Facts of the case is
Based on employees request Company will buy laptops for them
-50% of the cost of the laptop will be recovered from the employees in 24 instalments by way of adjustment in monthly salary.
-on completion of two years the laptop is handed over to employee.
-in case an employee leaves prior to two years then the outstanding instalments amount is recovered and laptop is handed over.
My Queries are
(1) since the asset will be on companies name over the said period of two years can the company claim the depreciation benefit on Original Cost of Assets both under IT & Companies Act or the same needs to be reduced to the extent recovery made during a particular financial year.
(2) Is there any Perqs.in hands of Employee at the time of giving assets for Use to Employee.
(3) If Original Cost of Laptop is say Rs.50,000/- & Rs.25,000/- to be recovered from Employee in 24 Instalments what will be the perqs.in the hands of Employee at end of 24 months.
(4) What will be the scenario if employee leaves before end of 24 months and balance amount recovered from him before hand over of Laptop to employee.
(5) How the accounting entries need to be passed to give effect to recovery of asset value in 24 instalments.
(6) Is there any Capital Gain to Company at the time of Transfer of Laptop to Employee at end of 24 months under Income Tax & Companies Act
Plz.reply on the above issues.
Thanks.
My query is regarding perqs.valuation on use of Movable Assets
Facts of the case is
Based on employees request Company will buy laptops for them
-50% of the cost of the laptop will be recovered from the employees in 24 instalments by way of adjustment in monthly salary.
-on completion of two years the laptop is handed over to employee.
-in case an employee leaves prior to two years then the outstanding instalments amount is recovered and laptop is handed over.
My Queries are
(1) since the asset will be on companies name over the said period of two years can the company claim the depreciation benefit on Original Cost of Assets both under IT & Companies Act or the same needs to be reduced to the extent recovery made during a particular financial year.
(2) Is there any Perqs.in hands of Employee at the time of giving assets for Use to Employee.
(3) If Original Cost of Laptop is say Rs.50,000/- & Rs.25,000/- to be recovered from Employee in 24 Instalments what will be the perqs.in the hands of Employee at end of 24 months.
(4) What will be the scenario if employee leaves before end of 24 months and balance amount recovered from him before hand over of Laptop to employee.
(5) How the accounting entries need to be passed to give effect to recovery of asset value in 24 instalments.
(6) Is there any Capital Gain to Company at the time of Transfer of Laptop to Employee at end of 24 months under Income Tax & Companies Act
Plz.reply on the above issues.
Thanks.
14 January 2013
Q 1.-
The laptops are asset of the company and as such entitled for depreciation under both the Statutes.
Q.2
No Perquisites as the computers or laptops are used -up to any extent for the business purpose of company.
The laptops are asset of the company and as such entitled for depreciation under both the Statutes.
Q.2
No Perquisites as the computers or laptops are used -up to any extent for the business purpose of company.
14 January 2013
Q.3
The asset value will be depreciated till its ownership is transferred to the employees and will be transferred at a price higher than the book value. So question of perquisite will not arise.
.
The asset value will be depreciated till its ownership is transferred to the employees and will be transferred at a price higher than the book value. So question of perquisite will not arise.
.
14 January 2013
Q.4-
The use of computers laptops by employees is not treated as a perquisite.
.
The amount recovered can be shown as Advance Recovery against Lap Tops. In case the employee leaves in between and the amount is collected from him to make it a total of Rs. 25000/- against the laptop.
.
The sales consideration has to be reduced from the block.
.
No Perquisite in the hands of employee assuming that the market value will also be fallen of the lap top at the time of transfer.
.
The use of computers laptops by employees is not treated as a perquisite.
.
The amount recovered can be shown as Advance Recovery against Lap Tops. In case the employee leaves in between and the amount is collected from him to make it a total of Rs. 25000/- against the laptop.
.
The sales consideration has to be reduced from the block.
.
No Perquisite in the hands of employee assuming that the market value will also be fallen of the lap top at the time of transfer.
.
14 January 2013
Q4.
Accounting Entries:
==================
THE AMOUNT COLLECTED HAS TO BE SHOWN AS ADVANCE TILL THE ASSET IS TRANSFERRED.
.
TRANSFER SUCH COLLECTED AMOUNT IN THE ASSET ACCOUNT AND MAKE NECESSARY ENTRIES FOR PROFIT OR LOSS TO MAINTAIN THE BOOKS AS PER COMPANIES ACT.
.
Accounting Entries:
==================
THE AMOUNT COLLECTED HAS TO BE SHOWN AS ADVANCE TILL THE ASSET IS TRANSFERRED.
.
TRANSFER SUCH COLLECTED AMOUNT IN THE ASSET ACCOUNT AND MAKE NECESSARY ENTRIES FOR PROFIT OR LOSS TO MAINTAIN THE BOOKS AS PER COMPANIES ACT.
.
14 January 2013
6. CAPITAL GAINS:
In the block of assets -still certain assets are left and the block value does not becomes less than Zero- No capital gain will arise.
.
On sale of Lap tops if Block shows extra amount recovered the same will be treated as STCG.
.
l
In the block of assets -still certain assets are left and the block value does not becomes less than Zero- No capital gain will arise.
.
On sale of Lap tops if Block shows extra amount recovered the same will be treated as STCG.
.
l
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