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Accounting Treatment of Loss on Sale of Car

S. M. Desai (CONSULTANT) (84 Points)

28 May 2008

Dear All,

What will be the accounting treatment of loss on sale of fixed asset (Car) in books of Private Limited Company as per Companies Act and Income Tax Act?

Following are the details :

Book Value of Car - Rs. 9,50,000.00

Car Sold at - Rs. 8,00,000.00

Loss on sale - Rs. 1,50,000.00

Awaiting earliest response in the matter.

Thanks,

Best regards,

Shitanshu

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10 Replies

guest (22 Points)
Replied 28 May 2008

Treatment as per companies Act

As it is loss it shud be taken to P&L as usual.

Entry

P&L A/c Dr. 150000

To Loss on sale of Car A/c 150000

Treatment as per Income tax act

If there is no other asset in the Block of asset of which the car is a part , it can be claimed as a business expenditure. If there is any other asset in the car block then only depreciation can be claimed.

Shailesh (service) (47 Points)
Replied 28 May 2008

Treatment as per companies Act

As it is loss it shud be taken to P&L as usual.

Entry

1) Loss on sale of car Dr 150000

Bank / cash Dr 800000

To car 950000

2) P&L A/c ..Dr. 150000

To Loss on sale of Car A/c 150000

Treatment as per Income tax act

no depreciation will be allowed in the year of sale for the car.

block asset concept...

Azmathullah Khan (Accounts Manager) (1386 Points)
Replied 28 May 2008

Entry should be

Loss on sale of car a/c Dr

To Car Account

Where as Car account is under Fixed assets and Loss on sale of Car is an Nominal Expenses which is a P&L A/c head

No depreciation will be taken for the year of sale to any assets.

The entry shuold be as per company act.,

The different of amount as per Income tax to be shown under Deffered tax liabilities or Assets

YOGESH SHARMA (service) (34 Points)
Replied 28 May 2008

IF DEPRICIATION RESERVE RS.50000/-THEN WHAT IS TREATMENT ?

vikas (student) (38 Points)
Replied 02 June 2008

loss will be taken into account after the depreciation has been deducted afterthe depreciation deducted then the entry will depend upon the profit/loss

vikas (student) (38 Points)
Replied 20 June 2009

loss on sale of car

P & L A/c. (loss) Dr.

cash A/c. Dr.

To Car A/c.

Biswanath (CA final stude) (56 Points)
Replied 16 September 2009

Hello professional colleagues,

Can any body tell me what is treatment of loss on sale of asset theft and under which section it is to be treated.

Biswanath

09176691115

suraj bhan (Account Manager) (26 Points)
Replied 19 November 2009

Hello,

Company has sold car in loss which was purchased in last year, but depreciation was not provided in last year due to loss booked.

Now in current year car has be sold, what will be the accounting treatment and this will effect company trading profit.

suraj bhan (Account Manager) (26 Points)
Replied 19 November 2009

Hello,

Company has sold car in loss which was purchased in last year, but depreciation was not provided in last year due to loss booked.

Now in current year car has be sold, what will be the accounting treatment and this will effect company trading profit.

Indira Priyadarsini Kota (Practice) (590 Points)
Replied 30 January 2021

For loss of asset by theft, you have to credit the asset account and debit "Loss by theft" account with the book value of the asset lost. You can claim this as a deduction while calculating profits as per income tax.