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Treatment of Overvaluation of Investment

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This query is : Resolved

CA Shiva Prasad S (Querist)
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09 September 2009 Hellow,
In the case of proprietor Invst in MF has been showing overvaluation for last 3 years and I want to rectify same this year.
How shall I proceed,
1)Shall show it as a loss is there any problem?
2) Shall I debit it proprietors capital account?
3) Pls guide me if any other method which is safer for the client.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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18 September 2009 CASE 1. Overvaluation means presentvalue or NAV is less than the investment made or
CASE 2. due to any other reasons ?

CASE 1
Mutual Funds are shown at cost. If you exactly want to do something you may
DISCLOSE AS -Investment in Mutual Funds (at cost) (write ORIGINAL amount)
CASE-2; If out of the pool sum mutual funds have been sold at loss earlier and the amt of loss is thus accumulated over there- It is possible when realisation is credited but the corresponding loss was not tfd to Capital. Action 2 is appropriate in this case.

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