Assess the WDV of particular car from the gross block of 10 cars

[atul mittal]

if some one sell his one car from the gross block of 10 cars, what entry will be made. do we need to assess the WDV of particular car. if so,do we need to record the profit or loss in the sale of such fixed asset.How Accumulated depreciation A/C should be treated?

[Dinesh Gupta]

The treatment for the purpose of Income Tax and for the purpose of companies act (in case of a company) are different. For the purpose of Income Tax, there is no need to calculate individual w.d.v. of the the car that is sold. The sale price of the sold car is reduced from the gross block and depreciation is calculated on the remaining w.d.v. Further, there is no impact of sale of depreciable asset on the accumulated depreciation.

AI Summary

Clarification on accounting treatment: No need for individual WDV calculation when selling a car from a gross block. A query was raised regarding the accounting treatment when selling one car from a gross block of ten cars, specifically whether the written down value (WDV) of the individual car should be assessed and how to record profit or loss from the sale. The response clarified that for Income Tax purposes, individual WDV calculation is unnecessary. Instead, the sale price is deducted from the gross block, and depreciation is calculated on the remaining WDV. The sale of a depreciable asset does not affect the accumulated depreciation account.