Depreciation on Vehicle

This query is : Resolved

samir (Querist)
Follow

10 March 2009 Dear sirs,
In a Proprietor Ship a Car sale on 4 th march 2009, Book value is on 1.4.2008 Rs.435000/-, Car Sold at 335000/-

My question is Depreication will be calcuated for 11 months and deducted from book value and How i give treatment of Profit / loss on sale of car,please explain from entry level

Secondly buy a new car on 05th march 2009 what would be % of Depreciation for 2008-09, Kindly reply.

CA RAMESH KUMAR AHUJA

CA RAMESH KUMAR AHUJA (Expert)
Follow

10 March 2009 The sale proceeds of Rs 335000 of old car is to be adjusted against the WDV of Rs. 435000 and depreciation is chargeable on the cost of new car plus the loss of old car at the rate of 7.5% (1/2 of normal rate).

CA.Tarun Maheshwari

CA.Tarun Maheshwari (Expert)
Follow

10 March 2009 If you buy a new car then WDV exist on 31.03.2009, hence no loss to be shown in P&L Account, rather depreciation shall be calculated as told by Ahuja Sir. There is no concept of monthwise depreciation in Income Tax. Its either for less then 180 days or for more then 180 days.
In books also. you will not pass any entry for profit or loss on sale of car. Just pass entries for sales consideration, and purchase of new car. And provide depreciation on the closing balance.

Upgrade to CAclubindia Pro. Subscribe Now!