purchase of fixed asset in case of cash basis of accounting

This query is : Resolved 

Avatar

Querist : Anonymous

Profile Image
Querist : Anonymous (Querist)
08 July 2011 what is the treatment?

08 July 2011 Hi,
I dont think, it would be any problem if you capitalise the Assets once you make the payment of the same.

08 July 2011 Section 40A(3) of Income Tax Act speaks about expenses claimed and paid in cash exceeding certain limit. If you have made the investment in Fixed assets the act is not putting any restriction. You can purchase the assets in cash but restrict as far as possible and debit to the respective assets but the cash payment should always be supported with the proper documents and if required take the cash memo and in case of second hand machinery or other assets have an agreement in which you can specifically mentioned terms cash payment.


Avatar

Querist : Anonymous

Profile Image
Querist : Anonymous (Querist)
11 July 2011 Hi,thanks for the replies. But I wanted to ask that how fixed assets will come in the Balance sheet since it has to be expensed out in the Profit & loss A/c in the year of purchase under cash basis of accounting.

16 May 2012 The asset will be capitalised when the payment for the same is made.

The entry will be as under:

Fixed Assets A/c Dr
To Bank A/c



You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Join CCI Pro
CAclubindia's WhatsApp Groups Link


Similar Resolved Queries


loading


Unanswered Queries