Business income + lic commission + govt.fair price shop in
This query is : Resolved
07 November 2012
Dear Sir, One my client running trading Business in Agro seeds. Besides that His LIC commission and Govt. fair Price Shop income. My query is that should I shown all 3 Inomes under the Profits & Gains of Business or Profession. If so Shall I Prepare trading, profit & Loss Account for the above Incomes separately or clubbing the Expenses. His LIC Commission around 3 Lakhs. Please advise me with details. Thanks in advance.
07 November 2012
You should prepare the Agro seeds trading and profit and loss account seperately and the other 2 business can be shown in a single profit and loss account.
The balance sheet will be a single balance sheet showing assets and liabilites of all the three business because i assume that you have only one bank account for all the three businesses.
You can seperate the indirect expenses as per the ratio.
e.g. Depreciation on vehicle can be seperated in 3 categories according to its usage in each business and accordingly salary of employees etc.
Thanks and Regards
The balance sheet will be a single balance sheet showing assets and liabilites of all the three business because i assume that you have only one bank account for all the three businesses.
You can seperate the indirect expenses as per the ratio.
e.g. Depreciation on vehicle can be seperated in 3 categories according to its usage in each business and accordingly salary of employees etc.
Thanks and Regards
09 November 2012
Dear Anand Modi Sir In case He is having separate bank account for each business than what is the treatment. He is having only one Vehicle to use all the 3 business how to depreciate to separately and is there any ratio for separate Indirect expenses. Please guide me with details.
Thaking you sir once again.
Thaking you sir once again.
09 November 2012
Then you can prepare 3 balance sheets.
while Preparing Balance sheets you have to make 1 main balance sheet where you will show investment in two other business.
In other two business you have to show the capital. The amount of capital is the same as the amount of investments.
After preparing all the balance sheet you have to club all the balance sheet to make a single balance sheet of all the businesses.
Depreciation on vehicle can be seperated based on the assumption made by you client that what is the usage of a vehicle for each business. if the vehicle is linked mainly with only one business and other two business are occasional then you can to allocate depreciation @ 80% to main business and balance to two other business (This is clearly my assumption)
For preparing banalnce Sheet refer below example.
Main Business X
Commission Business Y
Other Business Z
Now you will show investment in Business Y and Investment in Business Z in the Balance Sheet of X.
and in the balance sheet of Y & Z the amount of opening capital will be same as the amount of Investments shown in Business X Balance Sheet.
while Preparing Balance sheets you have to make 1 main balance sheet where you will show investment in two other business.
In other two business you have to show the capital. The amount of capital is the same as the amount of investments.
After preparing all the balance sheet you have to club all the balance sheet to make a single balance sheet of all the businesses.
Depreciation on vehicle can be seperated based on the assumption made by you client that what is the usage of a vehicle for each business. if the vehicle is linked mainly with only one business and other two business are occasional then you can to allocate depreciation @ 80% to main business and balance to two other business (This is clearly my assumption)
For preparing banalnce Sheet refer below example.
Main Business X
Commission Business Y
Other Business Z
Now you will show investment in Business Y and Investment in Business Z in the Balance Sheet of X.
and in the balance sheet of Y & Z the amount of opening capital will be same as the amount of Investments shown in Business X Balance Sheet.
09 November 2012
Thank You Sir
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