CA_Final Student
885 Points
Joined January 2010
Assume that the asset purchased on 01st October for Rs. 1,00,000/- payment made through bank and errorenous entry passed on payment as Debtors A/c Dr to Bank.
On the year end Debtors Balance in Balance Sheet is Rs. 1,00,000/- instead it should be Fixed Asset less depreciation (suppose the Depreciation Rate as 10% SLM). So our Asset in Books should be Rs. 95000 and Depreciation Rs. 5000.
On 30th Sept of next year
The Should be value in books for Asset Rs. 90000 And Accumulated Depr Rs. 10000,
We Return our asset to the Seller, But first we have to rectify in our books as follows
Assets A/c Dr. 90000
Depreciation A/c Dr. 5000(C.Y. Statement of P&L)
Depreciation A/c Dr. 5000 (Prior Period Item as per A.S.5)
To Debtors 100000
Now while returning the Assets take the amount to be received from seller as selling price and calculate gain or loss on asset
Selling price of Asset - Value of Asset in books.