Loss on Sale of Car

Argument by the chief accountant is not correct. Loss on sale of vehicle (Fixed Assets) should be transferred to P&L A/c. Vehicles are not the stock of the company rather its fixed asset, so the argument that company owns lots of vehicles has no standing at all.

Both the Original cost of that particular benz car and its corresponding accumulated depreciation should necessarily be completely removed from the Fixed Asset schedule and the loss on such sale of that car should be debited in P&L account.

Tell your chief accountant only in Tax purview we'll 've to worry about the block of asset. In Accounts, we'll 've to show the true and fair view as its illogical to still show the asset in books which is not physically available.

Then how did the stat./Internal auditor certifies the Asset Register as Physical and Books would've shown difference rite...

Thanks.. If the company is having two or three Benz Cars and all of them come under the same head Benz Cars and there is no bifurcation between the same and one among them is sold. Individual value is not shown.

 Then what would be the treatment?

Originally posted by : Rahul
	Thanks.. If the company is having two or three Benz Cars and all of them come under the same head Benz Cars and there is no bifurcation between the same and one among them is sold. Individual value is not shown.  Then what would be the treatment?

compute the cost of purchase, depriciation for previous years upto the dazte of sale and then determine the short term capital loss by way of sale of depriciable asset

Lets assume 3 cars, the original cost of each say Rs. 50lac respectively which were bought in diff diff yrs.

Accumulated Dep of 1st car - 30 lac, WDV - 20 lac

Acc Dep of 2nd car - 25 lac, WDV - 25 lac

Acc dep of 3rd car - 35 lac, WDV - 15 lac.

Now car 3 is sold for Rs. 10 lac so loss is Rs. 5 lac now.

Now remove Rs.50 lac orig.cost and Rs. 35 lac acc.dep alone from the block  of benz car and post the loss 5 lac in Dr.side of P&L A/c...

Originally posted by : Rahul
	Thanks.. If the company is having two or three Benz Cars and all of them come under the same head Benz Cars and there is no bifurcation between the same and one among them is sold. Individual value is not shown.  Then what would be the treatment?

 even in suh situation you always know which car u sold, when it was bought, what was its original cost(you must have journalised the purchase). So compute dep. on the original cost of that car only and find out the loss

you are roght in your argument..just say it to chief accountant with more conviction....nad give him backing of AS 10

also since the car is sold last year..loss on its sale if debited to current year profit should b shown as prior period item....AS 5

Originally posted by : Shruthi
	Lets assume 3 cars, the original cost of each say Rs. 50lac respectively which were bought in diff diff yrs. Accumulated Dep of 1st car - 30 lac, WDV - 20 lac Acc Dep of 2nd car - 25 lac, WDV - 25 lac Acc dep of 3rd car - 35 lac, WDV - 15 lac. Now car 3 is sold for Rs. 10 lac so loss is Rs. 5 lac now. Now remove Rs.50 lac orig.cost and Rs. 35 lac acc.dep alone from the block  of benz car and post the loss 5 lac in Dr.side of P&L A/c...

 I Agreed

Each amt in b/s should stand against a fixed asset .

the balance amount should rightly be transferred to p/l ...

:)

Dear Sir/ Madam,

i have quaery regarding loss on sale of motor car. I have one individual a/c under that we got a letter from income tax department says that the loss on sale of motor car is a capital loss and same is not deductable from the profits shown by the assessee. Howerver the assessee  has debited rs say approx 100000 in the profit & loss a/c and has omitted to add back the same in the computation of income from business accordingly, the same is disallowed being a capital loss.

please advice after passing the entry in Profit & loss a/c do we need to show again in balance sheet at the end of the year.