jaiprakash (CA Final) (103 Points)
12 July 2011Now if a company sells Building having a WDV value of RS:5 lakhs for RS:50 lakhs and having an accumulated depreciation of RS:15 lakhs
Then amount transferred to :
profit and loss account would be Rs: 15 lakhs
Capital reserve wolud be Rs: 30 lakhs
And to assets would be Rs: 5 lakhs
I am right in respect of this?
Pls help
rachit jain
(chartered accountant )
(635 Points)
Replied 12 July 2011
45 lakhs will be transfer to profit & loss a/c and 50 lakhs will be credited to building a/c
jaiprakash
(CA Final)
(103 Points)
Replied 12 July 2011
| Originally posted by : rachit jain | ||
 |
45 lakhs will be transfer to profit & loss a/c and 50 lakhs will be credited to building a/c |
 |
by doing this dont u think that you will be violating the matching concept priciple as anything in excess of purchase cost should be trated as capital reserve
Sumit Grover
(Chartered Accountant )
(3652 Points)
Replied 12 July 2011
the journal entry should be--
CASE I
if provision for depr a/c also opened:
Bank A/c Dr. 50L
Provision for depr Dr. 15L
To Fixed Asset 20L
To Gain on sale 45L
CASE II
id shown on net basis directly:
Bank A/c Dr. 50L
To Fixed Asset 5L
To Gain on sale 45L
plz correct me if m wrng
jaiprakash
(CA Final)
(103 Points)
Replied 12 July 2011
My question is whether 30 lakhs should be treated as capital reserve
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