NIRMAL SHARMA (G.M. ACCOUNTS & FINANCE) (83 Points)
01 October 2011Dear Sir,
If and Plant & Machinery sold in Loss, than what is the effect on Balance Sheet & Profit & Loss A/c. And, such loss will be allowable in Income Tax.
Thanks,
Nirmal Sharma
VIJAYKUMAR
(CHARTERED ACCOUNTANT)
(203 Points)
Replied 01 October 2011
Under Income tax the loss on plant and machinery is to be based on Block of assets.If in the block whole of the assets is sold the net difference should be Short Term profit/Loss.If the Assset remains unsold in the block and if the net amount is positive then the depreciation should be allowable on balance amount.If it results in negative amount then the amount should be treated as short term capital gains.
Rahul Suneja
(CA-Final, CS-Exec)
(215 Points)
Replied 02 October 2011
entry for loss or profit on plant & mach.
Cash/Bank a/c dr.
P/L a/c dr.
To Plant & mach.
and in P/L
P/L a/c dr.
To loss on plant & mach.
due to this net profit will be reduced by the respective amt.
Bhaskar Unnikrishnan CPA CMA
(Accounts / Administration)
(414 Points)
Replied 03 October 2011
In siple langauge, write down asset on book value from balance sheet and recognise loss in P&L A/c and this loss is tax deductable.
25 Hours GST Scrutiny of Return and Notice Handling(With Recording)
Survey, Search and Seizure under Income Tax Act 1961
CAclubindia
