Journal entry

as per company act:

assets value                     2000000

less: depreciation ( say)    15000( assumed one month used at the rate of 10%)

w d v on sale date              1985000

actual sale                           1720000

loss                                       265000

 

entry:

for purchase:

asset a/c           dr

    to bank a/c

for dep:

depreciation a/c    dr

       to asset

for sale:

bank a/c           dr

loss a/c            dr

        to asset a/c

        

agreed with kaya 

yes loss is 265000/- .... hidden adjustment is Depreciation adj @ 10%..

plz kaya how to calculate depreciation amount i am not understand it??????????i think it would be 16667 rs..........(2000000*10*1/100*12)

                                                                           

i think only if the faulty asset had been replaced by a new one we can classify this item as fixed asset. Since the returned item was not held for the purpose of business neither any economic benefit has been received by the entity. Thus, it will be treated as investment and loss of Rs 2.8 lacs should be provided. Here, i think the substance of the transaction matters rather than the form.

100% Agree with Mr.Souvik and loss is 2.8 Lakh