Sales of machinery treatment

This is either at the lower of carrying amount or fvlcd and fvlcd only in the case of acquired asset in business combinations IndAS 105. Now that you know how much it is worth ie., 4 lacs,

the presentation for held to sell assets are initially presented in the balance sheet eg.,

Held for sale asset a/c

To Fixed assets a/c

then make necessary disclosures as per the standard. Then expense costs related to sales

Finance costs a/c

To Bank a/c

after the sale is over, 

Bank a/c

Loss from disposal a/c

To held for sale asset a/c

To Gain from disposal a/c

tax liabilities could be involved and usually I am currently not working on the tax issues. Depreciation is done till the date of held for sale only and not during the period classified as held for sale. 

As 10 is almost the same and does not prescribe specifically for acquired assets. So, it’s lower of carrying amount and NRV/FVLCD and here NRV is selling price minus costs and that could be fair value as well, and no special treatment for costs incurred while disposing which means they can be expensed like above. 

Next, the revalued assets: In case of any revaluation loss, it can be reversed to the previous years gain in revaluation surplus which was previously credited to Revaluation reserve account in equity. 

Revaluation loss a/c

To Revaluation reserve a/c

after the sale of the asset, what ever revaluation surplus leftover from the assets useful life revaluations, it must be transferred to general reserve.

Revaluation reserve a/c

To General reserves a/c

Yes, in AS 10 it is just disposal and retirements.

IndAS 105.6- classification criteria is ‘Held for sale’

IndAS 105.38- presentation criteria as a ‘Held for sale’ item on balance sheet.

i would publish it as ‘Held for sale’ transactions on annual reports and remember seeing once or twice. 

Asset disposal ledger? Held for sale needs to be reported clearly and disclosed from the time management decided till disposed. In the end you could be correct if your working on it. 

I think I messed up here. Kollipara was talking about sale of machinery, disposed!! 

If it is not debited to capital account on purchase? That means you purchased the machinery out of working capital. But after sales, you credited the money back to capital account. That won’t be necessary to adjust the capital account, put the money back into bank account. 

Sry for the confusion. Thanks for your patience Mr. Sabyasachi. I did not understand the question last night and probably that’s the reason why I gave the whole treatment.

There is no account, it’s a contra asset. 

Elaborate a little

Want to know

Capital

retained earnings

Bank od/ loan

reserves 

All of the money related to the above is in bank account. when they purchased, they could have used cash from any of the resources. When they purchased machinery capital is not debited it seems, so they used OD cash or working capital cash. When they sold the asset, they credited capital account- bank should be debited. 

Next when a machinery is purchased

Fixed Asset a/c

To Bank a/c 

and if the company uses sources of cash,

Retained earnings a/c

reserves a/c

capital a/c

To bank a/c. It is reconciled with sources of cash. Dual aspect representation is not possible. 

when management plans to sell the asset and machinery cost is 10,000 out of fixed asset carrying amount 100000₹,

Held for sale sale a/c10000₹

To Fixed assets a/c 10000₹

after sale of asset

bank a/c

To Held for sale a/c (de recognition of asset.)

then reconcile again with items of equity  after taking gain or loss to profit and loss. Reconciliation is needed because IndAS 1 suggests that all the items should be remeasured annually.

forgot to mention , no need to credit loan and od amounts as they are payables