Hello,
My investments face values is 50,000
in books it is shown as 45,000
assets rs
invstment(face value 50,000) 45000
now if i sold investment for rs 40,000.
Then my loss will be 5000 or 10,000?
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Investment calculation
Replies (6)
Dear Tanuja,
The gain will be 10000.
That is to say sales value minus cost (45000)
I m really sorry...it will be 40000 minus 45000
Ths loss is 5000
Dear Tanuja,
loss will be Rs. 5000 (40000-45000), assuming that the diminution in the value of investment (from 50000 to 45000) in books was on account of permanent diminution, not a temporary ones. (cosidering long term investments)
Best Regards,
CA Lovely Arora
ca.lovelyarora @ gmail.com
current WDV of your investment is Rs. 45000/- and if you are selling it for Rs. 40000/- your loss on sell of investmetn is Rs 5000/-
According to AS 13 the acquisition of any investment need to be valued at cost or fair value whichever is low, so presuming the cost is lower than the fair value than recognition at 45,000 on acquiring investment is correct. As per para 21 of AS 13 the on disposal of investment difference between carrying amount and the sales proceeds net of expenses will be recorded to P&L.
Therefore based on above guidance of AS 13, the loss of Rs 5000 be recorded in P&L.
5000 bcoz by showinng it at 45000 as an assets you allready booked loss of 5000.. now at the time of sale u need to book only 5000 more............
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