Purchased of fixed assets

What effect to be passed for Purchase of Fixed Assets which includes VAT and Also to write of the depreciation for Eg.: Printer Purchase for 8500/- Plus VAT @ 5% 425/- total cost is 8925/-. How to show the above entry for purchase of fixed assets and same for the depreication. plz kindly let me know.

Replies (26)

VAT paid on Capital Items not allowed as Input for VAT (AP VAT)

So, you record the asset with total Cost, i.e Rs 8,925/- and depreciate accordingly

Entry for the Same

Printer/ Computer Peripherals A/c   Dr 8,925

To Bank A/c                                                                   Cr 8925

Following entry is to be passed

Printer A/c                           Dr.          8500

Input VAT A/c                      Dr.            425

     To M/s XYZ A/c (Creditor)                         8925

(Being Printer purchased from M/s XYZ)

 

Assuming that the Printer is purchased on 30th June. Hence full depreciation @ 60% available.

 

Following is the Journal Entry for Depreciation

Depreciation A/c  [8500 x 60%]             Dr.     5100

      To Printer A/c                                                               5100

(Being Depreciation provided @ 60%)

 

Note : The Input VAT on Printer cannot be claimed full. As per Rule 53 of MVAT, the Input VAT is subject to Retention of 3% ie only Rs. 412.25/- is available for set-off.

 

Regards,

Devendra Kulkarni

 

 

          

Generally VAT cannot be claimed on items which do not form part of the manufacturing process. If the printer is used in the manufacturing process then you can claim the input vat.

In such a case it becomes plant and machinery instead of being a part of the computer.

The above entries are correct but the context must be understood properly before passing the entries.

Not agreed with Praveen & Devender -Input is allowed on Capital Goods i.e the assets which are used in the manufacturing process of goods, which concern is going to sale to customer & printer is included in office  equipments & theregore not  eligible for  VAT Input. So you have to capitalise whole Rs. 8925/- into Fixed  Assets and then  claim depreciation accordingly.  

Originally posted by : Pulkesh Mehta

Not agreed with Praveen & Devender -Input is allowed on Capital Goods i.e the assets which are used in the manufacturing process of goods, which concern is going to sale to customer & printer is included in office  equipments & theregore not  eligible for  VAT Input. So you have to capitalise whole8925/- into Fixed  Assets and then  claim depreciation accordingly.  

Printer/ Computer Peripherals A/c   Dr 8,925

To Bank A/c                                                                   Cr 8925

above entry is correct Becoz VAT paid on capital itmes not allowed for input credit. and Depreciation will apply on full value Goods Rs. 8925/-

 

Agree with neeraj and prakash.. printer should be capitalised with full amount i.e. 8925/-..

Its depending on whether you are registered under VAT or not, if registered input VAT can be taken and balance will be capitalised (8,500/-) else full amount including VAT will be capitalised (8,925/-)

 

Printer is capitalized at full value with vat & depreciation can be claimed on full value (also consider 180 days concept)

The entire amount including VAT is to Capitalised and Depreciation should be provided accordingly

what if printers play an important role in the manufacturing proceess say printers used in a carton box manufacturing company.

 

Credit of Both excise and VAT are available.

 

People who say i am not correct please reply

Originally posted by : Devendra

Following entry is to be passed

Printer A/c                           Dr.          8500

Input VAT A/c                      Dr.            425

     To M/s XYZ A/c (Creditor)                         8925

(Being Printer purchased from M/s XYZ)

 

Assuming that the Printer is purchased on 30th June. Hence full depreciation @ 60% available.

 

Following is the Journal Entry for Depreciation

Depreciation A/c  [8500 x 60%]             Dr.     5100

      To Printer A/c                                                               5100

(Being Depreciation provided @ 60%)

 

Note : The Input VAT on Printer cannot be claimed full. As per Rule 53 of MVAT, the Input VAT is subject to Retention of 3% ie only Rs. 412.25/- is available for set-off.

 

Regards,

Devendra Kulkarni

 
hello mr devendra kulkarni being a professional student you should think what to write & what sholud not. Dont suggest such useless reply  
 

          

vat credit on capital goods is vary from state 2 sate...

as per icai 100% credit is available...n depriciation is allowable on full amount..(inc. vat)

Normally input put of Fixed Assets can not be claimed,in connection with Input Credit, if it not used directly for Manufacturing Process  

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