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

WDV calculation for block of assets: sale reduces gross block and depreciation runs on remaining written down value. For income tax purposes a disposal from a block of assets reduces the gross block and depreciation is computed on the remaining written down value of the block; there is no need to determine the written down value of the particular asset sold and the accumulated depreciation account is not separately adjusted for tax block accounting.