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Accounting treatment

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 a  pvt ltd company sold building for 3200000 . the wdv of building is 1575125. what will be account entry in  books of company. 

Replies (10)

Entry on Net Basis

 

Bank ac dr  3200000

To Building                            1575125

to profit on sale                     1624875

Originally posted by : sivaram

Entry on Net Basis

 

Bank ac dr  3200000

To Building                            1575125

to profit on sale                     1624875

agreed

Originally posted by : sivaram

Entry on Net Basis

 

Bank ac dr  3200000

To Building                            1575125

to profit on sale                     1624875

for accounting treatment it is correct
Originally posted by : sivaram

Entry on Net Basis

 

Bank ac dr  3200000

To Building                            1575125

to profit on sale                     1624875

Yes agreed with Mr.Sivaraman

The above entry is correct and for tax purpose it will be treated as STCG so keep it in mind.

Agree with  Sivaram :)

 

@ Deepti :- But why will it be STGC?? How did you get the clue that the building was of short term?

Aparna Raja K.C,if on sale of depreciable assets,if capital gain arises,than itis  always treated as STCG

Deepti is right

gree with  Sivaram

the entry should be made in the books as follows

Bank ac dr  3200000

To Building                            1575125

to profit on sale                     1624875

and short term gain on sale of assets chargeable to tax.

i absolutely agree with Sivaram..its a simple one..

however w.r.t answer tht Pulkesh Mehta gave, I would say tht Pulkesh is right in case where Sec 50 of 

the Income Tax Act is applicable i.e. the WDV of the block of an asset is zero inspite of actual existance of an asset OR there is zero asset in the block inspite of existing WDV balance...

hence STCG in case of depreciable assets would be applicable only when situations depicted u/s 50 come into play..

If that is not the case then normal provisions of capital gains shall be applicable and STCG/LTCG shall be decided accordingly...


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