GITA RAYATATHA (STUDENT) (98 Points)
22 May 2013
Rama chary Rachakonda
(Master in Accounts & Lawyer email ID:ramachary64@gmail.com voice no:9989324294)
(6311 Points)
Replied 24 May 2013
| Originally posted by : GITA RAYATATHA | ||
 |
What is current years rectified profit for the purpose of calculating average capital employed, does it consider adj for current asset and if yes so when? |
 |
Before calculating the average profits the following adjustments should be made in the profits of the firm:
a. Any abnormal profits shoulld be deducted from the net profits of that year.
b. Any abnormal loss should be added back to the nat profits of that year.
c. Non operating incomes eg. income from investments etc should be deducted from the net profits of that year.
Mohammad Asif
(chartered accountant)
(191 Points)
Replied 26 May 2013
rectification does not include revaluation of current assets and liabilities it simply takes into account errors for example: let us say PAT is 300000 Rs tax rate is 50% and depreciation of Rs. 10000 has been less provided for then the procedure is as folows
PAT Rs 300000
Add : Tax Rs 300000
PBT Rs. 600000
Less: Rectification of errors
(Depreciation) Rs.10000
Rectified profits Rs 590000
half of rectified profits after tax = 590000 x .50 x .50 = 147500 Rs.
When question specifically states that any item has to adjusted in books then it is a error or specifically states that it is a error and the above procedure will apply.
if still not clear let me know i will show you the same type of question.
regards
GITA RAYATATHA
(STUDENT)
(98 Points)
Replied 26 May 2013
Payal mittal
(21 Points)
Replied 16 October 2015
Dear Sir,
Please tell me the treatment of Non trade Income whether it is considered in calculation of rectified profit or not?
Rajat Joshi
(Article Assistant)
(1 Points)
Replied 31 August 2016
Can you please give an example for the same to get a better understanding
25 Hours GST Scrutiny of Return and Notice Handling(With Recording)
CAclubindia
