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Question regarding profits & gains from business or profession
if there is under or overvaluation of closing or opening stock will the amount of depreciation as per books of accounts be added back as expenditure disallowed to net profit as per profit and loss account?
Replies (9)
No dep is not on stock
can you please see this sum and tell me that Why in this solution depreciation as per books of accounts is not added back as expenditure disallowed to net profit?
I am not able to get the image here
Image sent
undervaluation of cl.stock leads to decrease in profit and undervaluation of op.stock increases the profit that's why first one is added and second one is deducted
profit=sales+cl.stock-purchases-op.stock
But why is it that depreciation amounting to Rs.15000 ( mentioned in the books of accounts) in the sum not added back to the net profit as disallowed expenditure ?
depreciation relates to fixed asset stock is current asset means trading asset, therefore depreciation not effected by changes in stock
thank you
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