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Cenvat reduced from asset value after capitalisation

Statutory Audit 773 views 1 replies

I want confirm whether the below treatment is in line with the AS-10 & other AS.

 

Company capitalized factory building of Rs. 2 Crore on 31/03/2013 , afterwards on 30 Aug 2014 company received CENVAT credit of Rs. 4 lacs on the labour payments already added to the cost of asset. Now whether to treat this credit as a reduction from asset vaule or as other income. If we treat it as reduction from assets value then it means depreciation of 31-03-2013 was wrong.

 

thanks in advance

 

Replies (1)
The question is how the existence of cenvat credit was not known while finalising 2013. If it was a genuine error in estimates then you can rework the depreciation for 2013 this year and treat the diiference as a prior period item in any case cenvat credit has to be reduced from cost of asset


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