I have a query regarding p/l of sale of PPE,
if company has profit on it whether will it hit only p&l account or treat as capital reserve ? also reply for loss as well ?? journal entries??
Sale proceeds of the assets is more than the cost then over and above the cost is considered as capital reserve.
sales value is Rs. 120.
cost of the asset is Rs. 100
book value of the asset is Rs. 75
total profit is Rs.45.
out of Rs. 20 is capital reserve. (120-100)
balance is credited to profit and loss a/c Rs. 25/-
(100-75)
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