As 10

Save Share

This query is : Resolved

Sabareesh (Querist)

20 January 2015 Dear Experts,
Our company has purchased a car for an employee worth 4,00,000/- & the cost borne by company is Rs.3,50,000/-, the rest was borne by the employee. Now our company has to capitalize the car at what cost? is it 4 lakh or 3.5 lakh?

Can your ans be supported with an AS?

P V Ram

P V Ram (Expert)

20 January 2015 This is a case of jointly owned assets. As per A S 10, You need to capitalise Rs. 3.50 lacs and Depn. has to be calculated accordingly.

Thanks.

Sabareesh

Sabareesh (Querist)

20 January 2015 Dear Ram Sir,
Can you provide the excerpt of the AS stating this plz? I want to add that the asset is registered in the name of the company & the asset will be transferred to the employee only after four years.

P V Ram

P V Ram (Expert)

20 January 2015 This is as per para 34 of AS 10 reproduced below:

34. In the case of fixed assets owned by the enterprise jointly with others,
the extent of the enterprise’s share in such assets, and the proportion of
the original cost, accumulated depreciation and written down value should be stated in the balance sheet. Alternatively, the pro rata cost of such
jointly owned assets may be grouped together with similar fully owned
assets with an appropriate disclosure thereof.

Note: In practice, the method what you indicated is rarely followed.

Thanks!

Message likes : 1 times

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now