Treatment of fixed assets in case of closure of business

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Dear members,

There is a private company which has closed its business 5-6 years back and is not planning to go ahead with any business activity. There are fixed assets which are lying as it is and are not in use in any way. And there was no depreciation charged on such assets since the closure of business. They are shown at their book value.

Now that new CA,2013 has taken place, what to do with that block of asset? How to show them in balance sheet. Booking of depreciation of previous years is not possible as it will result in huge losses in the books of company which is not correct. How to show the fixed assets in the books which are lying as it is and also there is no business in the company neither do they have any plans of business in future?

Pls reply. Its pretty urgent.

 

Replies (1)

There are two scenarios under which you may write off a fixed asset. The first situation arises when you are eliminating a fixed asset without receiving any payment in return.

This is a common situation when a fixed asset is being scrapped because it is obsolete or no longer in use, and there is no resale market for it. In this case, reverse any accumulated depreciation and reverse the original asset cost. If the asset is fully depreciated, that is the extent of the entry.


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