Go AD-FREE with CAclubindia Pro and Daily WhatsApp Updates. Subscribe Now!

Sale of part of assets and treatment in books

600 views 2 replies

SIVARAMAN and SUNDARAM

PARTNER

185 Points Joined October 2010

Dear members

10 years ago 5 separate machineries were purchased through a single invoice and capitalised in the books. The cost of individual machineries and Depreciation reserve are not known today. The company is charging depreciation regularly on wdv.

Now the company is going to replace one of the above machinery and it will be a capital nature. My query is

1. How to arrive at the WDV for the old machine which is going to be replaced by new one.

2. Method of accouing profit / loss in the books.

Replies (2)

Prakash

Chartered Accountant

560 Points Joined September 2011

As per your information, we can get the aquisition cost of Palnt through that Invoice and Calculate the depreciation as if that the only plant by applying the same rate what you used for entire Block and arrive the figure after providing for 10 years

To account for the same, write off the WDV of plant Replaced (Show Net, If realised any value on scrap)

Capitalize the new Plant Purchased

For Calculating Depreciation as per Income Tax act it will be little different