Ranjeet (Deputy Manager) (26 Points)
26 November 2015Please correct me if I am wrong:
A Computer purchased Rs.50,000 and a Printer received free with it worth Rs.5000.
As per my knowledge the journal entry would be:
Computer Acc dr. Rs. 50,000
Printer Acc dr. Rs. 5,000
To Cash Rs. 50,000
To Revaluation Reserve Rs.5,000
In this way we can record the fair value of both the assets and we can depreciate printer by reducing Revaluation Reserve in the coming years.
Please suggest
Ruchi
(CA)
(1410 Points)
Replied 26 November 2015
I dont think revaluation reserve should be credited here. The printer should be recorded at nominal value and no depreciation should be claimed.
Vivek Kurup
(.)
(355 Points)
Replied 26 November 2015
Agreed with Ruchi.
Revaluation account can't be credited as this process is not revaluation but its recording at fairvalue. Moreover, as per AS-10, selective revaluation is not permissible, but we have ro revalue the entire class of assets. Therefore, you may need to revalue the entire class of computer and computer peripherals, if you opt for adjustments in revaluation reserve account. So, in my opinion, its better to credit general reserve account.
And, certainly, in any case, you cant depreciate the nominal value of printer, as there is no cost to be spread over the life of the asset.
Alternatively, you can also treat it as income and transfer it to p&l, as this is a non monetary benefit arising to the organization. In any case, this may be taxable u/s 28(iv). Therefore, if you can procure an invoice from the supplier showing separately, the value of the computer and printer as 45k and 5k respectively, it would be the best option.
Amir Nazir Sheikh
(10 Points)
Replied 26 November 2015
ashish
(article)
(151 Points)
Replied 26 November 2015
Parul Patangwala
(article assistant)
(21 Points)
Replied 27 November 2015
CA Vap Patel
(Practice)
(1205 Points)
Replied 27 November 2015
Section 43 explanation 2 is the answer to your question. As per explanation 2 to Sec 43." Where an assets is acquired by the assessee by way of gift or inheritance, the actual cost of the asset to the assessee shall be the actual cost to the previous owner"
From this cost reduce actual depreciation charged by previous owner and deemed depreciation. In short WDV to previous owner is your cost. Since you direclty bought from shop. This clause will not apply.
So you simply take 5000 the cost of printer in to your block of assets and enjoy the depreciation on it.
Journal Entry
Printer A/c Dr 5000
To Gift A/c 5000
Regards
Ranjeet
(Deputy Manager)
(26 Points)
Replied 27 November 2015
Sonia kaushik
(Accountant and Tax Executive at Freelancer)
(60 Points)
Replied 02 December 2015
Accounting treatment for printer and computer will be as follows:-
Computer A/c Dr. 50000
Printer A/c Dr. 5000
To Bank A/c 50000
To Gift A/c 5000
Since printer is received as gift and as well printer is an asset for company and for claiming depreciation we can adjust the fair value of printer as a gift and credit to profit and loss account as income.
For further query email me at:- soniakaushik10 @ gmail.com.
Rehan Ahmed
(Accountant)
(40 Points)
Replied 12 December 2015
Hi,
Anybody tell me how to take entry in tally.
ashish
(Private Service)
(26 Points)
Replied 30 December 2015
Ramesh
(Student)
(90 Points)
Replied 31 December 2015
Computer Dr 50000
Printer Dr 5000
To Bank 50000
To SPL 5000
You may directly transfer the amount to SPL.
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