Ad-Free CAclubindia and Daily Updates on your mobile. Subscribe Now!

Cash Basis and Depreciation

Pushkraj Sathe (Chartered Accountant) (203 Points)

19 December 2007

Whether making depreciation journal entries in cash basis of accounting is contravention of cash basis?

Reply
Follow
Share

8 Replies

S.Srinivasaraghavan (Chief Financial Officer and Co) (11318 Points)
Replied 19 December 2007

There is no 'violation' in any legal sense, more particularly from Incometax assessment angle, as whether you maintain your accounts on cash basis or accrual basis you are entitled to depreciation

Upgrade to CAclubindia Pro. Subscribe Now!

Ramkrishna Mokashi (Chartered Accountant) (734 Points)
Replied 29 December 2007

An Assessee is entitled to depreciation whether he writes his accounts on cash basis or on acrual basis.

However, in my opinion, in case of accounting on cash basis, one cannot pass entries of depreciation.

(Guest)

hello I'm looking for

CA Jay Kumar Sharma (CA) (88 Points)
Replied 31 January 2008

Hi, This is true that assessee is entitle to claim Depreciation whether assessee is making entries on Cash Basis on accrual basis for INCOME TAX purposes. But if you making depreciation journal entries in cash basis of accounting then it is contravention of cash basis accounting concept and ur profit figure may be different. Plz Reply Jay 09304270080 CA Final Student

1 Like

Sohil Ganeriwala (Practicing CA) (308 Points)
Replied 02 February 2008

yes u can pass depriciation journal entries under cash basis, there is no contravention of cash basis.

Upgrade to CAclubindia Pro. Subscribe Now!

CA Guru M (B.com, CA, CS) (1552 Points)
Replied 12 February 2008

No sir You cann't pass entries for Depreciation & other outstanding expenses in cash basis of accounting. Becausse it will Violate the basic fouda of CASH BASIS.

1 Like