LIVE GST Audit Course by CA Sachin Jain. Register Now!!

Asset recognition read more at: http://www.caclubindia.com/

Souvik Kumar Ghosh (CA Final) (1368 Points)

20 September 2013

The partners of a partnership firm decided incorporated a Pvt Ltd Co, without conversion. Now after discontinuing the partnership they want to introduce the existing assets of the firm in the company without any consideration. How to incorporate the same?

Reply
Follow
Share

6 Replies

Samrendra (Asst. Manager- Internal audit) (221 Points)
Replied 22 September 2013

Dear Souvik,

Capitalized Fixed Asset with Fair Market Value by treating same as Loan provided to company by promoters / Shareholders.

Fixed Assets A/c Dr. xxxx

To Loan (Liability) xxxx

You can enter Fixed Assets at zero value in your Fixed Assets register, if partners don't want to receive any thing as consideration for Fixed Assets in future.

Shivani (Learner) (1881 Points)
Replied 05 October 2013

Samrendra sir

what will be the entry in second case

will it be

Fixed assets

to Capital

Samrendra (Asst. Manager- Internal audit) (221 Points)
Replied 05 October 2013

Dear Shivani,

NO ENTRY will be made in second case as we can not record any transaction with zero value. Recording in Fixed Assets register track record of assets available for use in business but actually charged to profit and loss accounts fully to prevent assets, from being misused and misplaced.

Shivani (Learner) (1881 Points)
Replied 06 October 2013

Samrendra Ji

You mean in second case no entry will be there.

But u said that fixed assets will be charged to PL A/C to prevent misuse.

How can we charge them to PL A/c if fixed assets have zero value ! !

Who said accounts is boring :-)

Shivani

Samrendra (Asst. Manager- Internal audit) (221 Points)
Replied 06 October 2013

What I mean to say that Fixed Assets register help management to track those assets physically which has not reflecting in books because of its zero value.