Entry for loss on sale of plant & machinery

Under Income tax the loss on plant and machinery is to be based on Block of assets.If in the block whole of the assets is sold the net  difference should be  Short Term profit/Loss.If the Assset remains unsold in the block and if the net amount is positive then the depreciation should be allowable on balance amount.If it results in negative amount then the amount should be treated as short term capital gains.

entry for loss or profit on plant & mach.

Cash/Bank a/c    dr.

P/L a/c                 dr.

To Plant & mach.

and in P/L

P/L a/c               dr.

To loss on plant & mach.

due to this net profit will be reduced by the respective amt.

In siple langauge, write down asset on book value from balance sheet and recognise loss in P&L A/c and this loss is tax deductable.