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Final-FR- Goodwill valuation- FMP

11 April 2018

Ref: Q6 of MTP Aug 2017 series.
Why is depreciation on vehicle provided for 6 months in adjustment for computing FMP after calculation of average profits.
Please reply.

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16 Replies

Divakar (Student CA Final ) (11857 Points)
Replied 11 April 2018

What is date of purchase vehicle... Is that in middle of year... In that case u hv to deduct 6 months depreciation... Bcz in future depreciation is for the year... In average profit only 6 months depreciation is provided..

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Parminder Singh (744 Points)
Replied 11 April 2018

in avg profit depn charged only in lastcyear because that is when asset was purchased. only 1/4th of half year depn is reflected in avg profit. but in future full depn will be needed na

Divakar (Student CA Final ) (11857 Points)
Replied 11 April 2018

Didn't get u bro... When is vehicle purchase date... And u urself give answer... Then qery raised??

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Parminder Singh (744 Points)
Replied 11 April 2018

vehicle purchased in middle of last year.

Divakar (Student CA Final ) (11857 Points)
Replied 11 April 2018

Already told that may be the case... From next year full year depreciation is to be charged that's why 6 months depreciation is charged in FMP

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Parminder Singh (744 Points)
Replied 11 April 2018

ok. another doubt in same question is that they have taken 50% rectified profit in computing avg capital employed, then why they have not taken rectified prov for tax in liabilities?