How will fixed assets be determined in case of proprietorship concerns and partnership concerns. This question has been asked with reference to undocumented SME sector where no proper records are maintained and personal and business assets/ funds are often made mixed.
1) In case of proprietorship concern
If proprietor is utilizing a property for business purpose which is onwed by a close family member and rent is not being paid. Will it be included in fixed assets?
or property can only be included among fixed assets if it is owned by proprietor himself and utilized specificaly for business purpose of propritorship concern.
2) In case of partnership concern
Lets assume a partnership concern comprising of 5 partners having equal shares where partnership deed made is not comenting over fixed assaets of the firm. Firm is working in an economy where assets cannot be owned/ transfered in the name of partnership concern like in the case of prv l...td company.
Will we include business place of firm among fixed assets;
a) If business premises is owned by one or two partners out of five
b) If business premises is onwed by all five partners with equal shares
c) If business premises is onwed by all five partners with not equal proportion
d) If Business place is owned by one the relatives of partners and rent is not being paid
Please guide and clarify what action should be taken in such cases at the time of preparing balance sheet.
CAclubindia
