Hi,
We had an Asset which we lost in accident last financial year. Insurance claim will be received in current financial year. please tell me what will what will be the entry in my books for the same and in income tax .
MANOJ (B.Com) (29 Points)
25 September 2013Hi,
We had an Asset which we lost in accident last financial year. Insurance claim will be received in current financial year. please tell me what will what will be the entry in my books for the same and in income tax .
Janani Subramanian
(Employed)
(151 Points)
Replied 25 September 2013
The entry would be :
Bank a/c Dr [ for the insurance claim received]
P&L A/c Dr [ for the loss in the asset]
To Asset a/c [the book value of the asset being cancelled off]
The Tax impact would be as per S.45(1A ) where asset is destroyed due to accident or any other unavoidable reasons then the treatment would be:-
1.The difference between amount received and the WDV should be taken and from this amount the extent of depreciation claimed in ealier years should b treated as PGBP U/s 41(1)
2. The remaining amount afterv depreciation should be treated as Capital Gain whether short term or long term will be computed on the tym period for which he asset was held by the assessee.
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