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Sale of used car by Propreitor

20 April 2020

Dear Experts
Please guide me

Propreitor sold used car (shown in his balance sheet) at a loss since sale price is less than the value in the books.. What will be the treatment of the same in the books??

Kindly enlighten your views
Thanks

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12 Replies

RAJA P M ("Do the Right Thing...!!!") (127911 Points)
Replied 20 April 2020

After sale proceeds the balance values transfer to PandL account as "Loss on Sale of Car".

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yash varshney (Pro) (248 Points)
Replied 20 April 2020

Dear sir
The car is not a business asset and no depreciation has been availed on the same.
It is just an personal asset for the Propreitor that's why shown in the balance sheet.
Now the same has been sold at a loss..
If I am not wrong only amount relating to business can be debited to p&l account
My question is how to de recognize the same from the asset side of balance sheet

RAJA P M ("Do the Right Thing...!!!") (127911 Points)
Replied 20 April 2020

Are You asking about Business balance sheet or Your personal...?

Is the Car in business balance sheet or Your personal..?

yash varshney (Pro) (248 Points)
Replied 20 April 2020

Sir as I mentioned the business entity is a proprietary concern and as per my understanding the Propreitor and his business are not separate from each other, then no such question of business or personal

Please correct me if I am wrong

RAJA P M ("Do the Right Thing...!!!") (127911 Points)
Replied 20 April 2020

Business balance sheet and Individual balance sheet are different...

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yash varshney (Pro) (248 Points)
Replied 20 April 2020

A per my knowledge individual and business are not separate entity and proprietorship is a type of enterprise that is owned and run by one person and in which there is no legal distinction between the owner and the business entity.

The owner is in direct control of all elements and is legally accountable for the finances of such business and this may include debts, loans, loss, etc. The sole trader receives all profits and has unlimited responsibility for all losses and debts.

Hence there should be no difference between business balance sheet and personal balance sheet

What's your opinion?

Devil (Confidential) (177 Points)
Replied 20 April 2020

As per separate entity concept both business and businessman are different persons and accounting is done for business not for business man so if u had showed car in business Bs. then you have to transfer the loss to p&l a/c. from book value less sales price

RAJA P M ("Do the Right Thing...!!!") (127911 Points)
Replied 20 April 2020

My opinion noted above...
Before give explanation think about others views...

Are You filed ITR in any of the years with BS and PandL then check out the BS and PandL details with Your computation sheet...

yash varshney (Pro) (248 Points)
Replied 20 April 2020

Dear sir
Thought about others views... (done)
Filled ITR... (done)
I am just asking my query out of curiosity as there is no separate legal entity concept for sole proprietor he is wholly responsible for his business

RAJA P M ("Do the Right Thing...!!!") (127911 Points)
Replied 20 April 2020

Originally posted by : yash varshney
	A per my knowledge individual and business are not separate entity and proprietorship is a type of enterprise that is owned and run by one person and in which there is no legal distinction between the owner and the business entity. The owner is in direct control of all elements and is legally accountable for the finances of such business and this may include debts, loans, loss, etc. The sole trader receives all profits and has unlimited responsibility for all losses and debts.Hence there should be no difference between business balance sheet and personal balance sheetWhat's your opinion?

Yes... You are exactly correct. In individual and his business are same to the person. But, Transactions are not same with business and Proprietor...

If You are understand this then You can find out the difference. After that ask Your question again with details.

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Devil (Confidential) (177 Points)
Replied 20 April 2020

Sir accounting is done on the basics of principal concept convention and accounting standards and due to which both business and businessman are different persons and you have to maintain books of accounts separately
for true and fair view presentation of financial statements and complying with frf

and if u don't think so why u are maintaing books of accounts if u both are same

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stapler (bus) (282 Points)
Replied 23 April 2020

For instance, a Proprietor, besides his own sole proprietorship, may also be a Partner in other Firms. The incomes so derived from other entities are his personal incomes, the crux of which, alongwith that of his Proprietorship business, shall reflect in his personal BS. Obviously it will not, in the BS of his Prop.business. Hope it helps.

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