12 October 2011
a company has purchased plant and machinery in the year 2006-2007 for Rs. 45 Lakhs. a balance of Rs. 5 Lakh is still payable to the supplier for the same. the supplier waived off the balance amount during the financial year 2009-2010. the company treated it as income and credited to profit and loss account during 2009-2010. whether accounting treatment of the company is correct?
30 October 2011
It should ,instead, have been deducted from the cost of asset as per AS 10 which will result into lower future depreciation prospectively. Therefore, the given treatment is not correct. Regards, CA Shakuntala Chhangani
CAclubindia
