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Accounting of capital profit on sale of fixed assets

4307 views 3 replies

CA Ravindra kakani

Propritore

38 Points Posted on 04 January 2012

Suggest treatment of following transaction

Machinery purchase price 100000 WDV 60000 Sale Price 120000. If 20000 credited in capital reserve (Capital profit) than from whom act or AS these arise their legality. and where this is mentioned in AS.
Land purchase price 500000 Sale Price 520000. If 20000 credited in capital reserve (Capital profit) than from whom act or AS these arise their legality. and where this is mentioned in AS.

Replies (3)

Guest

I think this is mention in AS- 10

CA Neil Ganatra

Partner - Gautam Joshi & Co.

871 Points Posted on 05 January 2012

if any asset is revaluated upwards then such amount is credited to revaluation reserve. Profit/loss to the extent of outstanding balance of such reserve is charged to / credited to revaluation reserve account and other will be charged to / credited to Profit & Loss A/c as mentioned in AS-10

CA Ravindra kakani

Propritore

38 Points Posted on 05 January 2012

Originally posted by : CA Neil Ganatra
	if any asset is revaluated upwards then such amount is credited to revaluation reserve. Profit/loss to the extent of outstanding balance of such reserve is charged to / credited to revaluation reserve account and other will be charged to / credited to Profit & Loss A/c as mentioned in AS-10
	that is ok but what about the profit on the sold of over and above on origanal cost. and for this capital profit in AS 10 in which para this is mentioned (apart from revaluation of assets)