Loss in sale of car

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 February 2016 Dear expert.. plz solve my query, its urgent..... A proprietor has sold the car Rs. 150000/- on 28/1/2016 and the WDV of this car was 176257/- on 1/4/2015 hence the loss is 26257 however the proprietor has purchased New car Rs. 756840/- on 2/2/2016.. please let me know on which amount should i charge depreciation also provide the accounting treatment for the same.. Regard Dilip Kumar

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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05 February 2016 Depreciation will be charged on the closing WDV which will be calculated as under:
1,76,257+7,56,840-1,50,000 = 7,83,097

Querist : Anonymous

Querist : Anonymous (Querist)

05 February 2016 thanks for your valuable reply. sir can you tell me the accounting entry of selling car and purchasing New car with adjusting loss.

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CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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05 February 2016 Open a new ledger 'Loss on sale of car' under Indirect Expenses. Transfer the cost of the car and the accumulated depreciation thereon to this ledger.

The entries will be:
Loss on sale of car Dr
To Car A/c

Accumulated Depreciation Dr
To Loss on Sale of Car

Entry for receipt of money
Bank A/c Dr
To Loss on sale of car

The balance amount is loss which will be reflected in the P&L

For purchase of new car, pass the following entry:
New Car A/c Dr
To Bank

Querist : Anonymous

Querist : Anonymous (Querist)

05 February 2016 sir the loss is not deductable so i think it should not reflect in pl

Querist : Anonymous

Querist : Anonymous (Querist)

05 February 2016 sir. as per your earlier the dep. will be calculated on 783097 hence the loss has been adjusted also the loss is not deductable therefore it should not be reflect in p/L a/c, the entry as per me as under... Bank DR. 150000 Loss on sale of car DR. 26257 To old car 176257 New car DR. 783097 To loss on sale of car. 26252 To bank. 756840 plz tell me is this correct entries or not ..