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Editorial Board on Accounts and Audit
  • Disposal of Asset

    by Krishna Chaitanya on Wednesday, September 04, 2019 at 08:55 PM

    Company has disposed of half of the assets to single party under slump sale agreement. It is very difficult to apportion sale value to assets. It is also very difficult to arrive at Carrying amount of Each asset. How to pass accounting entries in Books of Accounts regarding Slump Sale of Assets and profit or loss arising on sale of the Same.

    Replied byEditorial Board Monday, September 16, 2019 at 09:16 PM

    Dear Krishna,

    If carrying amount of assets to be disposed off could not be determined then the best estimated value should be arrived at. Stating that carrying amount of individual assets is unknown is a stance which may not be acceptable to various statutory authorities. The entity must be aware of this situation.

    The best estimated carrying amount should then be compared with the sales amount and difference shall be treated as gain or loss on slump sale.

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