29 June 2011
One of My client being an Individual has started his/her business since jan,2011 & Onwards under the Proprietorship concern. He/she has purchased a Motor car before 3 years in his/her Individual name. Now such car we want to account for in his/her proprietory concern's Books as on 01.04.2011 so that he/she claim expenses related to Petrol,Repairs,Depreciation and Finance charges on Car Loan EMI Payments.Now the query is whether he can book the same at Book value i.e. w.d.v. by way of passing an entry debiting to Motor Car Account as Fixed Asset at Book value & crediting to his/her Capital Account as capital Contribution. also whether Motor car Loan from Banks can be booked as secured Loan in the same manner by debiting to capital Account & crediting to Motor Car Loan Account at outstanding amount as on 31.03.2011 as per banks repayment Schedule or not.
1.If I take income tax view,then motor car transfered to a proprietorship firm is to be recorded at cost and not at WDV.so you record the motor car at cost.
2. Loan is in the individual name. you want to tranfer in the name of the firm. You can apply to the bank for this & get a help from there...
CAclubindia
