Purchase of fixed assest for more value than the asset

This query is : Open

CA Devika K ACA., (Querist)
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02 May 2013 one of our client took a place for rent for business premises.
the furnitures were already built in by the earlier tenant. this company purchase the same for 1 cr. where as the bill available for 70 Lacs only . can u please help me how i need to account the same. and on what amount i need to charge depriciation.

V K Bajaj

V K Bajaj (Expert)
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05 May 2013 As your client purchased the furniture and fixtures @ One Crore so the earlier tenant is to issue you a Invoice for Rs. One Crore. Earlier Tenant will narrate the details of furniture on FIXED ASSET SALES INVOICE. You may keep the invoices for Rs. 70 Lakh as a supplement to Invoice of One Crore.

Based on this Invoice of Rs. One Crore you enter as under:

Dr Furniture & Fixture Rs. One Crore
Cr Bank Rs. One Crore