Loss on sale of machinery

The entry will be:

Cash/Bank     a/c   Dr            100000

P&L                a/c   Dr             400000

    To Machinery     a/c                              500000

[being machinery sold for 100000 at a loss of 400000]

The loss will be a short term capital loss assuming that depreciation has been provided on the machinery in the previous years

Agreed with Krishnaprasad...

Thank you for your reply.

What will be the accounting treatment if I do not want to sell this machine and want to devalue it.

Please let me know the tax treatment also.

For change in the value, the entry will be:

Revaluation a/c     Dr       400000

     To Machinery  a/c                        400000

[being machinery revalued downwards]

Originally posted by : KRISHNAPRASAD IYER
	For change in the value, the entry will be: Revaluation a/c     Dr       400000      To Machinery  a/c                        400000 [being machinery revalued downwards]

Agree with Krishan .., You can revalue your assets and make change accordingly.

There will be short term capital only if the total block of the asset nil

Will the revaluation have any tax impact??

There will be tax impact only when thre is extension/improvement.

Therefore, in this case, there will be no tax impact

Entry Will be made-

Cash A/c Dr.                    1,00,000

Loss on Machinery        4,00,000

Machinery A/c                                             5,00,000

( being Machinery Sold )

yes exactly, thre will not be any capital gain or loss on sale of fixed asset.untill n unless block of assset ceases... 

  Refer Section 50 for this

Cash A/c ...................................... 100000

Loss on sale of machinary............. 400000

                  To machinary a/c ...............               500000

( Being machinary sold for 100000 at a loss of 400000)