LIVE GST Certification Course by CA Arun Chhajer begins 27th April. Register Now!!

Journal entry

satyabrata sahu (Account & Audit Assistant) (30 Points)

29 August 2011

Sir

Please know me How the below transction book

A asset purchase on 1st jan,2011 Rs.20,00,000.But for some days later(it is use) Return to supplier.The supplier return us Rs.17,20,000 agaisnt that asset.How treat that loss in our company book.guide me

Reply
Follow
Share

6 Replies

CA.kaya (Chartered accountant) (3990 Points)
Replied 29 August 2011

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

2 Like

CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
Replied 29 August 2011

agreed with kaya

Anand Pardeshi (CA Final) (530 Points)
Replied 29 August 2011

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

(Guest)

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

Desi Mojito (Chartered Accountant) (142 Points)
Replied 30 August 2011

i think only if the faulty asset had been replaced by a new one we can classify this item as fixed asset.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.