21 April 2009
Hi, An asset purchased and wrongly debited to p & l Account. Subsequently it was traced out and capitalised. Now what is the accounting entry to be passed for the Depreciation not effected in the earlier accounting records.
21 April 2009
The entry will be: (normal entry which we pass usually)
1) Depreciation Account....Dr. xxx To Asset Account xxx (For depreciation)
2) Profit and Loss Account ...Dr. xxx To Depreciation account xxx (For transfer of depreciation to profit and loss account)
Please note that the amount of depreciation will be calculated as if the asset is capitalised since its inception. AS-6 states that the depreciation should be accounted with retrospective effect. it means the amount of depreciation will include the depreciation from the date on which asset is put to use.
(note: the amount of the entry will be cost of assets minus depreciation,[ which had been charged if the assets was capitalised as on date of purchase ]
CAclubindia
