If there is the factory and there is the fire in that factory and the machine was rendered un-useable and then we sold the machine for scrap, 100,000 was the original value and 50,000 was the written down value showing on the books and the scrap value is 10,000 and from insurance company we were able to recover 30,000, and we purchase another machine to replace the machine for 100,000. How to record the transaction?
Note: This is assuming all transactions are in the same period. If Fire is in Year 1 and Recovery is in Year 2, impairment will be done in Year 1 For the sale of scrap and receivable from Insurance company the entry is Bank a/c Dr 10,000 Insurance Receivable/ Bank a/c Dr 30,000 Loss on...
Difference between research and development?
Research is original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding. Development is the application of research findings or other knowledge to a plan or design for the production of new or substantially improved materials, devices, products, processes, systems or services before the start of commercial production...
What is the substantial period under Ins As for capitalizing borrowing cost w.r.t qualifying assets?
Generally, a period of 12 months is considered as a substantial period unless a shorter or longer period can be justified based on facts and circumstances of the case. Borrowing costs are capitalized in the books of accounts with the qualifying assets when it is certain that it will have future economic benefits. Bookmark...
IND AS 16 : What is the concept of Component accounting as per Ind AS 16 ? Why Component Accounting is used ?
Each major part of an item of PPE with cost being significant in relation to total cost of the item, should be depreciated separately, even though it may not have different useful life, but may be grouped for determining depreciation charge. Component accounting requires a company to identify and depreciate significant components with different useful...
Ind AS 16 : What is the Deemed cost exemption as per Ind AS 16?
As per Ind AS 101, the deemed cost exemption is applicable to PPE as defined under Ind AS 16 and recognised as Fixed Assets in the financial statements at the transitional date irrespective of whether these were disclosed separately. Bookmark...
Ind AS 40 : Definition of Investment property?
IAS 40 permits treatment of property interest held in an operating lease as investment property, if the definition of investment property is otherwise met and fair value model is applied. In such cases, the operating lease would be accounted as if it were a finance lease. Bookmark...