Suppose Mr. X is an employee of ABC Co. Ltd. The Company has a movie camera (Original cost Rs.60,000/- and W.D.V Rs.50,000/-)and the same is a fixed asset as per books of accounts of the Company. Mr. X has given charge to take care of the movie cam. One day the same has been reported as lost by Mr. X to his employer. Mr. X wants to compensate for this. Accordingly, he has purchased a new movie camera (having higher technical advantage than the previous one) without informing his employer at a cost of Rs.35,000/- and collected the bill in the name of M/s ABC Co. Ltd. He then prays before the management to accept this. Now, my questions are: 1. Would it be right for the ABC Co. Ltd. to accept proposal of Mr. X? 2. If ABC Co. Ltd. accepts the proposal of Mr. X and takes possession of the new movie camera then what accounting entry is require to be passed?
Please reply in detail with correct accounting treatment and figures in respect of above situation.
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