Fixed Asset Capitalized Twice.

[adeelcma]

Kindly suggest me how to write off one of the fixed assets capitalized twice, with reference to IFRS(if any). thanks.

[bilalfca]

well if u have capitalized a Fixed Asset (FA) twice, its an error with prospective application and u would have to adjust it by passing following entries

1. Cash/ Bank/ Payables... Debit (with the amountwrongly Credited)
FA.... Credit (amount with which it is capitalizedwrongly)


If depr. is charged

2. Accumulated Depr.. Debit (Total Depr. that has been charged to PLS)
Depr.......... Credit (Current year Depr. expense)
Net Profit.... Credit ( Balancing figure)

Retained Earnings (Accumulated Profits) will be increased because Depr(expense) has lowered the Net Profit in the years(s) depr. is/has been charged

3. Net Profit...................Debit
Retained Earnings................. Credit
(Adjusted Profit transferred to retained earnings)

thats all... (according to my understanding)

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<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by bilalfca</i>
<br />well if u have capitalized a Fixed Asset (FA) twice, its an error with prospective application and u would have to adjust it by passing following entries

1. Cash/ Bank/ Payables... Debit (with the amountwrongly Credited)
FA.... Credit (amount with which it is capitalizedwrongly)


If depr. is charged

2. Accumulated Depr.. Debit (Total Depr. that has been charged to PLS)
Depr.......... Credit (Current year Depr. expense)
Net Profit.... Credit ( Balancing figure)

Retained Earnings (Accumulated Profits) will be increased because Depr(expense) has lowered the Net Profit in the years(s) depr. is/has been charged

3. Net Profit...................Debit
Retained Earnings................. Credit
(Adjusted Profit transferred to retained earnings)

thats all... (according to my understanding)


<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">

Agreed with Bilal,

Dear ADEEL
This is an error and as per IAS #08 the company is required to rectify the error and adjust as given above as per detail procedure provided by Bilal in order to fair presentation of financial statement, free from any material misstatement weather due to fraud and error.

Regards

Umar