Accounting in case of exchange of assets
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
28 February 2013
a sole proprietor charges depreciation as per income tax act. he exchanged his car with another car. Whether he can recognize profit in such transaction? what will be the journal entry?
Dintakurthi Tirumala
(Expert)
28 February 2013
Debit the New car and credit the old car with the fair market value of the old car as on the date of transfer(exchange) or the book value of the old car which is available.
As well as according to the Income tax act for depreciated assets Profit or Loss doesn't considered at the time of sales it considered as short term capital gain or loss only at the time of such block of assets WDV becomes Zero or negative during the year at any time.
However if you want to recognise profit or loss on such exchange in your books you can recongnise by crediting the profit amount to P&L account or loss amount debit to P&L account but while you filing of income tax return you have to adjust it according to the income tax act.
OM SAI SRI SAI JAI JAI SAI
As well as according to the Income tax act for depreciated assets Profit or Loss doesn't considered at the time of sales it considered as short term capital gain or loss only at the time of such block of assets WDV becomes Zero or negative during the year at any time.
However if you want to recognise profit or loss on such exchange in your books you can recongnise by crediting the profit amount to P&L account or loss amount debit to P&L account but while you filing of income tax return you have to adjust it according to the income tax act.
OM SAI SRI SAI JAI JAI SAI
Message likes :
1 times
CA. PIYUSH GOEL
(Expert)
28 February 2013
yes the expert is very much correct
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Opting out" of regime provided under subsection (1A) of Section 115BAC but Form 10IEA is not filed.
- "Please ensure that the Total of the Deductions u/s 54F match the same in Table D in Sch CG"
- Need to correct "Whether it is last installment " response in Form 26 QB
- " Income from House Property " in joint names of co-owners
- REGARDING TDS RETURN OF FORM 27Q
- Notice under e-Verification Scheme
- GST demand notice for ITC reversal against exempted supply.
- RCM ON SECURITY CHARGES FROM INDIVIDUALS
- How to get money back from delisted company
- ITC not to be taken in accounts & GSTR-3B
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
