Accounting treatment

It will be as follows:

Purchase Account................Dr 15,00,000

To, Party Account                       12,00,000

To, Stock in trade Account         3,00,000

Instrument A/c.. Dr      15L

           To Bank                 12L

           To Old Instrument      3L

Plz make the adjustment for profit/ loss on the sale of old instrument which shall go to P&L A/c.

P.S.: This is a combine entry. Individual entry of sale of old item & then purchase of new instrument can be passed individually. * Instrument considered as asset.

1.Account for purchase of new Instrument of Rs. 15 lakhs

Fixed Asset A/c .......Dr.          15L

  To Supplier A/c                               15L

2. On replacement of old instrument:

  Depreciation on old Instrment (upto sale).  Dr      xxx

  Supplier A/c                                                        Dr.     3L

  Loss on Sale of Asset                                      Dr.      xxx  (in case of Loss only)

   To. Fixed Asset Account                                                        xxx (cost of Old instrument)

   To Gain on sale of Asset                                                      xxx  (in cash of gain only)

(Gain or Loss on sale of asset aries based on WDV value of asset as on the date of sale)