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Journal accounting

01 July 2018

in a balance sheet a fixed asset 's opening balance is 44893. then in 2-2-2018 school sale his bike in 20000 to a vehicle distributer and buy a new bike in 37500. then total bike value is (37500+20000 = 57500). but now how i can treat the remaining balance is 24893 with depreciation.
And how i can make Depreciation
chart of this motor vehicle.

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9 Replies

Brahma nanda Agrawal (KOLKATA) (331 Points)
Replied 01 July 2018

In Incometax Act 1961, Depreciation is charged by following block concept, As per block concept the closing balance of your block is 82,393 (ie 24893+57500) charge depreciation on 82393 If new vehicle obtained are put to use for lesa than 180 days charge 50% of applicable tax rate. For any query you may contact me 7059758724

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Ashish Khillan (Gaining knowledge) (1039 Points)
Replied 01 July 2018

no depreciation is charged on asset value in year of sale.
depreciation on new asset is for full year if used more than 180 days, otherwise half year depreciation

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Brahma nanda Agrawal (KOLKATA) (331 Points)
Replied 01 July 2018

Dear friend, He is buying assets by selling the old one on 2nd February, 2018. Asset block cease exist or not seen on balance sheet date (ie 31st March, 2018) and in that date new vehicle is in his block. so he should charge depreciation on Rs 82,393. Please share your view, How you are sharing no depreciation

Brahma nanda Agrawal (KOLKATA) (331 Points)
Replied 01 July 2018

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CA ABHAY GUPTA (Practice) (3230 Points)
Replied 01 July 2018

agree with Brahma nanda Agrawal but not at closing value of block as cost of new asset will be what he actually paid to acquire asset not what is fmv of an asset thus block will be 24893 + 37500

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Brahma nanda Agrawal (KOLKATA) (331 Points)
Replied 01 July 2018

You give your old vehicle to distributor (not received any cash) + paid 37,500 and received new vehicle, am i correct? If transaction happens thus then you should add 57,500 ( Because distributor charge you 37,500+ 20,000 (sale). FMV of vehicle is 57,500.

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CA Sunil Kumar (Chartered Accountant) (4524 Points)
Replied 01 July 2018

Depreciation will be calculate on closing balance 82393.
Opening balance: 44893
Add: additions: 57500
Less: Sale : 20000
Closing balance: 82393

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Brahma nanda Agrawal (KOLKATA) (331 Points)
Replied 01 July 2018

Fully Agree with Sunil kumar ji

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CA ABHAY GUPTA (Practice) (3230 Points)
Replied 02 July 2018

you cannot less the sale figure... as per ruling: CIT VS KASTURI & SONS LTD SC held that moneys payable means actual moneys payable in cash or by cheque/draft...

1 Like