reg slump sale in assets

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siva (Querist)
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15 November 2010 i need clear idea about calculation of slump sale of assets in the chapter "profits and gains of business or profession - depreciation".......

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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17 November 2010 Illustration:

X is having 4 undertakings named as A, B, C & D. Separate records are being maintained in respect of each undertaking. But for IT purpose X has to consolidate accounts of all the 4 undertakings.
In the consolidiated Balance Sheet X, there is 1 item in Fixes Assets say... Plant & Machinery (which is representing all the 4 units as like other Cons.Assets & Liabilities) stated at10,00,000/-.

Now X decides to sale Undertaking A for a LUMP SUM consideration of say 8 lacs.

(Assets and liabilities are not individually valued.)

A is having Machinery along with other assets & liabilities which will no more remain with X after transfer.

At the time of calculating depreciation on the remaining assets of B,C and D undertakings X has to make adjustments by reducing the WDV of transferred assets of Unit A from the respective blocks.

For this purpose Original Purchase cost of Machinery
sold away under the slump sale would have to be ascertained and on those whatever depreciation has been allowed has to be reduced. The balance will represent the WDV of Machinery sold.
This WDV is to be deducted from the Consolidated block. For Example a Machinery which was purchased and put to use on 15/05/2007 for Rs 100000/-
Depreciation claimed on this Machinery was Rs. 15000+12750+10838= 38588 till 31.3.2010. This asset is being sold under the slumpsale today.

For the purpose of Calculating Depreciation on 31.3.2011 the WDV (100000-38588) =61412 has to be deducted.

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