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Journal entry

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

29 August 2011  


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

 6 Replies

CA.kaya (Chartered accountant) (3985 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



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

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%..


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i think only if the faulty asset had been replaced by a new one we can classify this item as fixed asset.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

Replied 01 September 2011

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

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