My que. is that if a Fixed Asset has been sold than if profit or loss has arisen due to sale what would be the effect.
A. in case An Asset was revalued
B. In case asset was not revalued.
As per AS-10 i there is a treatment in Profit and loss A/c of loss or profit for asset sold which have not been revalued.
But my query is regarding assets which are revaluated before sale is effected.
Four crietria i have mentioned below and treatment also i want to ask you if a am wrong in accounting any of the following que.
1. if asset was previously revalued upward and there is a loss on sale of F.A
Sale value : Rs.3.5 lakh
Book value of last year Rs. 4 lakh.
Book value before revaluation Rs. 3 lakhs.
Answer.
Loss of Rs. 50,000 i.e (Rs 4 Lakhs -Rs 3.5 lakhs) should be charged to revaluation reserve.
And revaluation Reserve should be transferred to Genreral Reserve.
2. if asset was previously revalued downward and the is a loss on sale of F.A
Sale value : Rs.3.5 lakh
Book value of last year Rs. 4 lakh.
Book value before revaluation Rs. 4.5 lakhs.
Answer
Loss of Rs. 50,000 will be charged to Revaluation Reserve and balance of Rs. 1 lakh of Rev. Res will be charged to General Reserve.
3. if asset was previously revalued downward and the is a Profit on sale of F.A
Sale value : Rs.5 lakh
Book value of last year Rs. 4 lakh.
Book value before revaluation Rs. 4.5 lakhs.
Answer.
Profit of Rs. 50,000 will be transferred to Rev. Res. and balance of R.R i.e Rs. 1 lakh should be transferred to Gen Res.
4. if asset was previously revalued upward and the is a Profit on sale of F.A
Sale value : Rs.5 lakh
Book value of last year Rs. 4 lakh.
Book value before revaluation Rs. 3 lakhs.
Answer.
Profit of Rs 1 lakh will be credited To revaluation reserve and Balance of R.R will be Nil.
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