help me

A/c entries 836 views 1 replies

In case of pvt. ltd. company, if inventory is want to convert into fixed asset,which is retained in the bussiness for the period of  more than 10 years.Can it allowed by company law & accounting standard.Plz reply with any section or any notification.

Replies (1)

If the asset is put to use only after conversion, then pass an entry on the date of conversion at the historical cost, debiting Asset and crediting the stock account. For the income tax purposes, you can pass the entry, I believe, at historical cost itself and take the asset as addition to the appropriate block. If the stock is being used as asset even before the date of conversion, then retrospective effect must be given.


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