Block of Assets

No Shriram I apologise if it hurts anybody.... I didnt mean to down anybody. I am also a student and we'll keep on learning for our whole life..... I may also go wrong.. Sorry Again dear.

U r welcome for any query.

Regards

Deepak Bhardwaj

Thanks Deepak.........

WDV of block 600000 Mac A purchase & put to use 5-11-10 Rs 300000 Sold 28-03-11 Rs  400000 Dep 15%

In that case

WDV on block    1-4-10     600000

Add pur (<180)                   300000

                                              900000

less sold    (<180)                400000

                                                500000

Dep  15% on 500000 ie   75000

WDV 1-4-11                       425000

Hi friends,  I asked this query from CA Satish Mangal (DT faculity in New delhi) and he said that

it will NOT be considered for calculating WDV of block of assets as  WDV is computed at the end of previous year. asset non-existing on last day will not be considered.

Originally posted by : Monik
	Suppose W.D.V. of the asset on the first day of P.Y. is Rs. 500000/-. Depreciation for the relevant P.Y. amounted to Rs. 20000/- which inclusive of Rs. 10000/- is for the personal purpose then what will be the Closing W.D.V. at the end of the year???

depriciation is not efffected with the personal use or business use, full depriciation would be claimed,

You have to add up to the block of asset and than deduct it at the time of sale.

Depreciation wont be provided as the asset doesnot exist at the end of the year.

U see dear, Its very simple to understand the concept of block of Asset.

You have to just add all the additions made in the block during the year without looking at the dates. ie add all additions first.

after that only, deduct all the sale from that block without looking out the dates of sale.

Once you'll done with it.... then charge depriciation on the value appearing after additons and sales... but stop stop stop...... before charging depriciation just have a look whether the closing value after respective additions and Sales contains any asset which is purchased and put to use for < 180 days (both purchase and put to use should be in the same year only then you can charge 50% of the rate of depriciation otherwise not) or not and charge depriciation accordingly.

Here you'll have another confusion that ' how do we come to know whether  that asset is in that particular block'''  ????

the answer to that query is that Firstly,practically it is possible and secondly , we generally assume that the company must be following FIFO (if nothing is been told)  therefore if nothing has been said, we'll assume that it must be containing that particular asset which is put to use for less than 180 days (if and only asset purchased and  put to use <180 days case is there))

I Hope i have given enough clarity to solve your view... bt if still not able to get it u r most welcome.

Thanks and regards

Deepak Bhardwaj

The logic is very simple. Practically a Schedule of Fixed assets is prepared at the end of each year.

Then opening Schedule and Closing Schedule are compared.

Assets present in Closing schedule but Not in opening: ACTUAL COST is added to Opening WDV

Assets present in Opening schedule but not in closing: MONEY Payable is deducted.

.................thus an asset purchased and sold during same year do not come in Scene Which is a Separate Capital asset and ST or LT capital gain/loss is computed.