I just want to confirm that if suppose an entity is following the block of assets system of accounting & particular asset belonging to a block is sold over & above its wdv but later on the another asset belonging to the same block is purchased then whether capital gain arising on 1 st transfer of assets should be trf to profit & loss account or will remain under the same block..
16 July 2014
The capital gain arising on assets sold,will remain under the same block, if the entity is following the block of assets system of accounting.
16 July 2014
whatever is the accounting system profit or loss on sale of asset is transferred to profit and loss account.Block is reduced with the WDV (on the date of sale) of the asset sold
17 July 2014
You don't understand the block of assets system of accounting of depreciation for the purpose of tax working. The entire sale value whether it is profit or loss on sale will go to reduce the block value. Profit or loss on sale of assets entry will be passed in the books of accounts but in the tax working of block of assets, no profit or loss on sale of assets is considered separately.
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