Sale of asset accounting treatment

This discussion explores the accounting treatment for the sale of an asset. The original value was Rs 50 lacs, with a Written Down Value (WDV) of Rs 35 lacs, and it was sold for Rs 60 lacs. The difference between the original value and WDV (Rs 15 lacs) is depreciation. The profit on sale is calculated as the sale price minus the WDV (Rs 25 lacs). The key question is whether the excess amount over the original value (Rs 10 lacs) can be credited to a capital reserve instead of the profit and loss (P&L) account. The consensus is that profit on the disposal of a fixed asset is recognised in the P&L account as it's an indirect income and classified under SPL (Statement of Profit or Loss), not directly to reserves.