Dear All,
I have been facing some difficulties in understanding the concept of unabsorbed depreciation. Please explain it in the following examples:
A company has a loss of Rs. 4,00,000/- after providing for depreciation of Rs. 2,00,000/- i.e., it has a loss of Rs. 2,00,000/- before depreciation expense. As per my understanding, unabsorbed depreciation will be Rs. 2,00,000/- as the whole depreciation could not be covered due to losses. But what will be the business loss in this case? - Rs. 4,00,000/- or Rs. 2,00,000/-?
Similarly, If the company has Rs. 1,00,000/- profits before Depreciation expense of Rs. 2,00,000/-, the unabsorbed depreciation would be Rs. 1,00,000/- but what would be the amount of Business Loss?
CAclubindia
