Ankit (Auditor) (51 Points)
27 May 2011dear all..
help me out in this situation..
my company is having a machine, suppose wdv is 100
now it is outdated and a new machine is purchased, for say500 and the new machine is purchased in exchange of the old machine.
bill received is of 450(reducing50 on account of exchange of old asset ) but the bill does not anywhere show that there is an exchange.
What shud be the accounting treatment of the new and the old asset.
U S Sharma
(glidor@gmail.com)
(21063 Points)
Replied 27 May 2011
ask the management regarding treatment of old machine,
the practice is wrong, if they have transfered old machine, then they have to issue invoice to vendor for 50 and vendor has to issue invoice for 500, result is 4,50 net, but in absence of proper system the physical existance of old machine is questioned.
now the management has to show in accounts as scrap for old machine and sell out the same by paying taxes.
praveen
(Chartered Accountant)
(6971 Points)
Replied 27 May 2011
CAclubindia
