A proprietorship concern has a Fixed Assets having WDV of 11000 on 01.04.2014. On 01.12.2014, this assets has been sold for Rs. 27000. Now what should be the accounting treatment as per Income Tax Act if this is the only assets of the firm?
4 Replies
Hiten Tita
(CA)
(57 Points)
Replied 09 August 2015
The difference will be shown as Short term capital gain.
CA Vinayak akula
(none)
(38 Points)
Replied 09 August 2015
Hi,
The accounting treatment would be(As per income tax act)
Cash/Bank A/c.........Dr 27,000
To Fixed Asset 11,000
To STCG 16,000
The tax treatment would be to show 16,000 as STCG and not to take any depreciation on the sold asset for the current year...........
kanh singh
(CA Article)
(121 Points)
Replied 10 August 2015
If there are other assets in that block, what should be the accounting treatment for the same?
CA Vinayak akula
(none)
(38 Points)
Replied 11 August 2015
If there are other assets in the block there may be two situation
1.the wdv of the entire block is less than 27,000(sale value received )
eg:-wdv is 24,000
cash/bank a/c ........Dr. 27,000
To Fixed/ asset a/c. 24,000
To STCG a/c. 3,000
2.the wdv is more than the sale value
eg:-wdv is 30,000
cash/bank a/c.......Dr 27,000
To Fixed assets. 27,000
that means there would no STCG In 2nd situation
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