Profit on sale of fixed assets

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vipul (Querist)
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28 January 2014 1. why profit on sale of fixed assets is transferred to p&l a/c and not to capital reserve(as 10)
2. why cg on depreciable asset is treated as short term u/s50

Hemant Kumar

Hemant Kumar (Expert)
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29 January 2014 1) Sale of Asset is an Disposal of Asset. So The general goal of a disposal from the accounting perspective is to completely remove all traces of the asset from the balance sheet (known as derecognition). This may require the recording of a gain or loss on the transaction in the reporting period when the disposal occurs. Hence, This gain or loss transfer to Proffit & Loss Account not to capital account.