Avail 20% discount on updated CA lectures for Dec 21 .Use Code RESULT20 !! Call : 088803-20003

ICICI

Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More

Abhijit Ganguly (Chief Manager (F))     14 August 2021

Valuation of Assets and its impact on Depreciation of RWA

A peculiar case I need to share and an honest opinion is required.

A Resident Welfare Association (RWA) was formed after the builder failed to handover the Assets and Liabilities of the Builder Group. The Association took over the management of the building suo-moto from say beginning of June 2019. The first Statutory Audit Report (2019-20), showed the F/A as NIL and hence no depreciation was there in I&E Account.

The second year, the earlier auditor was removed and a new statutory auditor was appointed. The new Auditor, in his Audit Report of 20-21, included a valuation of the F/A which are physically there in the premises, and included the same as valued at end of 2016-17 and charged depreciation for 4 years starting from 2017-18 to 2020-21 and thereby reflecting the same in the B/S and I&E Account and giving a contra effect on the Liabilities side.

My question is:

What is the system of valuation? and whether this procedure can be adopted



 1 Replies

yasaswi gomes

yasaswi gomes (My grammar is 💯 good I)     16 August 2021

Irrespective of what ever business it is, where there is a commercial transaction, AS must be followed. Here when assets are disposed, it must be valued at lower of carrying amount or FVLCD. I did not understand failed to handover and took over. However, if someone occupies a property from a contractor, the transaction cost you paid= asset cost. This value is recognised in the balance sheet. Hence depreciation was charged if you purchased an old asset.


Leave a reply

Your are not logged in . Please login to post replies

Click here to Login / Register  


Start a New Discussion

Popular Discussion


view more »







Subscribe to the latest topics :
Search Forum:

Trending Tags