Fixed Assets

B has to treat the amount payable as creditors written back. Aggregate of depreciation written off in the books have to be treated as income

Generally people dont write back such creditors in case there is going to be an amalgamation of a situation when the company is obliged to show the networth to the maximum possible extent these kinds of credits are witten off

Generally people dont write back such creditors in case there is going to be an amalgamation of a situation when the company is obliged to show the networth to the maximum possible extent these kinds of credits are witten back

If it is come under purview of Excise duty, they have to compulsarily raise invoice and then they can calim the excise credit. It should not be treated as gift.

Simply, write off the balance to be paid to A as Creditors no longer payable and claim depreciation asusual.

First thing this is not so unusual in present day scenario. The primary lookout in such circumstance would be the stated purpose of the transfer in the first instance. If it were a genuine sale there is no reason why the liability should be written back. Where there is no stated purpose of the transfer and the then recorded facts and circumstances do not prevent an inference that the transaction is in nature of gift. Then no liability should be booked in the accounts instead the gift be valued at the fair value and recorded in the books debit to the asset and credit to the revenue.