Conversion of fixed assets into stock in trade
This query is : Resolved
27 August 2017
Dear friends/professionals, if a company converted its fixed assets into inventory then on which value accounting entry to be made (f m v or cost) whether in the books of account of the company provision for capital gain shall be made. whether differed tax assets/liability to be made....
27 August 2017
Accounting to be done on FMV.
27 August 2017
No Capital Gain arise now so no need to made any provision.
27 August 2017
But if you want you can create DTL.
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28 August 2017
thanks Rashmi ji. IND AS-2 is silent on above query but it provide that inventory shall be disclosed at lower of cost and NRV. IND AS -2 gives the definition of cost and in that definition cost means actual cost incurred by company to making inventory in current location. On the other hand if we take FMV that we have to create capital reserve to enhance the cost to FMV whether it is allowed by IND-AS.
28 August 2017
IND AS-12 does not allowed to made DTL on this particular transaction because it does not effects over book profit and profit for income tax purpose.
28 August 2017
IND AS-12 does not allowed to made DTL on this particular transaction because it does not effects over book profit and profit for income tax purpose.
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