Hi
going forward to the above query which was about p/l on sale of PPE, if plant is having
cost 20,000
Book value 14,000
sale value 18,000
in this case, sale value is less than cost price so my question is this nothing will be transferred to capital reserve as sales price is less than cost.
could you please journalise the same for my reference ..
First, you have to identify what policy the company is following: cost or revaluation model. From the above information it looks like assets are valued at cost. So, the book value referred to here is also the market value of the asset. So, I remember disposal of non current assets are measured at lower of carrying amount/book value or FVLCD. Here, Cost is lower. Then the entries are as follows:
Bank a/c 18,000₹
To Asset disposal a/c 14,000₹
To gain on disposal a/c 4,000₹
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