MY CLIENT IS A PRIVATE LIMITED COMPANY. IT HAS CAPITAL ASSETS IN THE BALANCE SHEET. ON 01.04.2012 IT TRANSFERRED THE CAPITAL ASSETS INTO STOCK IN TRADE AT BOOK VALUE. DURING THE FINANCIAL YEAR:2013-14, IT SOLD THE CONVERTED CAPITAL ASSET. AT THE TIME OF TRANSFER THERE IS NO CAPITAL GAIN BUT DURING THE FY:2013-14, THERE IS CAPITAL GAIN AS WELL AS BUSINESS PROFIT.
NOW MY QUESTION IS HOW TO GIVE TREATMENT TOWARDS LONG TERM CAPITAL GAIN AND BUSINESS PROFIT. ENTRIES REQUIRED.
PL SUGGEST ME.
Hi,
Conversion of asset to stock amounts to capital gain.
Capital gain will be in the year in which such stock is sold.
Computation of cap gain will be from cost of acquisition to the date of transfer of asset into stock.
Business income will be computed as sale consideration of stock less value considered for transfer to stock from capital asset.
For any further query PM or mail us.
anubhavjain @ ajhco.in
AJH & CO.
Chartered Accountants
hey..
what will be accounting entry in books for such converstion??
AJAY SINGH AND CO LLP
Thane
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