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Sales of machinery treatment


kollipara sundaraiah (B.com)     19 November 2020

kollipara sundaraiah
B.com 
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I.t.assess sales of machinery value rs:4 lacs amount credited capital account.if Assess purchases of machinery value not debited to capital account
question:
Assess how to passed accounting entries in books

avater

yasaswi gomes   19 November 2020

yasaswi gomes

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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. 

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yasaswi gomes   19 November 2020

yasaswi gomes

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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

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sabyasachi mukherjee   20 November 2020

sabyasachi mukherjee

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Held for aset account is not there.

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yasaswi gomes   20 November 2020

yasaswi gomes

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

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sabyasachi mukherjee   20 November 2020

sabyasachi mukherjee

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There is no account called
held for asst sale account
it is asset disposal account.

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yasaswi gomes   20 November 2020

yasaswi gomes

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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. 

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yasaswi gomes   20 November 2020

yasaswi gomes

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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.

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ayusmita (Tax consultant)     20 November 2020

ayusmita
Tax consultant 
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Sorry to interrupt but what is held for sale asset Account

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yasaswi gomes   21 November 2020

yasaswi gomes

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


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