16 May 2011
sir, a prop. firm having shop building (depreciable assets) with land. Sold during the year. Is shop building cover under depreciable assets and land cover under capital assets. pls. suggest. Also accounting on profit on sale of above property in boooks of account.
16 May 2011
Land is not depreciable assets however building is depreciable assets. On depreciable assets the gain will always be short term and for non depreciable assets it will depend upon the period of holding. if more than 3 years its long term.
A/cing entry will be:- Bank account dr. To Land (Book value) To building(Book Value) To profit on sale of assets(diff between book value and sales reliasation.)
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