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

Depreciation

SRINIDHI RAMJI (Student (CA Final)) (59 Points)

23 October 2018

A partnership firm consistimg of two equal partners A and B is dissolved on 28th Feb 2018. All the assets and liabilities are transferred/taken over by A. A becomes the sole proprietor and carries on the business for the next 1 month. Now my query is regarding the allowable depreciation for the firm and A as per It. How much depreciation is allowable in both of their hands...?

Reply
Follow
Share

11 Replies

Hitesh (Student) (3549 Points)
Replied 23 October 2018

Calculate depreciation as if now dissolution takes place. Then apportion on basis of days

Upgrade to CAclubindia Pro. Subscribe Now!

RAJA P M ("Do the Right Thing...!!!") (128010 Points)
Replied 23 October 2018

@ SRINIDHI.,

First of How is above said transactions like Partnership covered into Proprietorship...?

Elobrate Yourself...

1 Like

Rakesh Joshi (CA Final) (1272 Points)
Replied 23 October 2018

Correct. Depreciation should be calculated as per normal provision and apportionment should be done on the basis of number of days.

SRINIDHI RAMJI (Student (CA Final)) (59 Points)
Replied 23 October 2018

On the number of days is right but how to fill the depreciation chart in itr. It has only two options viz more than and less than 180 days

RAJA P M ("Do the Right Thing...!!!") (128010 Points)
Replied 23 October 2018

Dear.,

Depreciation will be calculate from the date of transferred in the books of Proprietorship... You can't book the depreciation Provide in the Partnership account to proprietor firm...

** Also you are not reply my 1st question...!

Upgrade to CAclubindia Pro. Subscribe Now!

Rakesh Joshi (CA Final) (1272 Points)
Replied 23 October 2018

As per number of days proportinate depreciation is allowed.

You can easily able to know whether the proprietorship is for more than 180 days or not right?

If proprietorship during the FY existed for more than 180 days then disclose in more than 180 days coloumn.

RAJA P M ("Do the Right Thing...!!!") (128010 Points)
Replied 23 October 2018

It's from Feb then less than 180 days...

SRINIDHI RAMJI (Student (CA Final)) (59 Points)
Replied 23 October 2018

@ RAJA PM Due to a dispute among the partners A settled B and started running the business.

1 Like

RAJA P M ("Do the Right Thing...!!!") (128010 Points)
Replied 23 October 2018

It's not possible through partnership into Proprietorship...

The Firm is Dissolutioned then it's SCRAP...

Mr B is over take / (Transferred***) then it's not under the Firm. Only through proprietorship and Not in the Firm's PAN...

Better to understand the details if it's required to You...

SRINIDHI RAMJI (Student (CA Final)) (59 Points)
Replied 24 October 2018

I think we should first deduct from the fixed assets chart of the firm the amount for which the asset is recorded in the proprietors books (as if we have sold the asset to proprietor) and depreciation is allowed only in the hands of Mr.A

Upgrade to CAclubindia Pro. Subscribe Now!

RAJA P M ("Do the Right Thing...!!!") (128010 Points)
Replied 24 October 2018

As per my view.,

For Ex (only for understanding)
A Asset's Dep value 1000 in a FY (A year have 1000 days just example for simple calculation).
Asset in hands of Firm 750 days. after transferred or take over the asset to proprietor firm and it's 250 days...

Before take over the all the procedures follow in the Take over process with depreciation (750 days as 750 rs claimed/Calcukated as depreciation).

After transferred the asset to proprietorship then he will claim 250 days depreciation as 250 Rupees...

Simply said the asset will be treated new one in the proprietorship Firm...