The assets in the firm were wrongly classified resulting in excess / short depreciation. Further on sale of asset, only the sale price was deleted from the Gross Block. No entries were being passed to effect the profit / loss on sale of asset. This resulted in the Balance sheet showing higher Gross Block as well as Net Block.
Now the assets were physically verified and reclassified. The depreciation has been recalculated. Please inform the entries to be passed for the excess / short depreciation provided earlier.
Also confirm whether the sale price or the original cost of the asset has to be shown as deletion in the Gross Block.Please also inform the entries to be passed for the same.
For example: As per the Balance sheet for the previous year, the gross block for vehicle is Rs.63,01,856/-, accumulated depreciation is 49,03,010/- and the net block was Rs. 13,98,846/-.
On physical verification of the existing vehicles, the gross block of the vehicles is Rs.51,05,620/-, accumulated depreciation is Rs. 40,47,927/- and net block is Rs. 10,57,694/-. It is noticed that the difference in Gross Block, accumulated depreciation is due to the fact that only the sale price was shown as deletion earlier.
Please advise the entries to be passed to show the true value of the vehicles in the current year.
An early opinion would be helpful and highly appreciated.
CAclubindia
