Capital reserve

45 lakhs will be transfer to profit & loss a/c and 50 lakhs will be credited to building a/c

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

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

My question is whether  30 lakhs should be treated as capital reserve