| Question And Answer | |
|---|---|
| Subject: | Accounting entries in the books of the firm , Reconstitution of firm ? |
| Category: | Income-Tax |
| Querist: | Ravi aiftp |
| Answered by: | Mr .Ganesh Purohit, Senior Advocate |
| Tags: | Accounting entries in the books of the firm, Reconstitution of firm |
| Date: | January 16, 2024 |
In continuation to what has been discussed in question number three above what would be the accounting entries in books of account of the firm on recording the same. Will the firm would liable to pay tax again when the stock in trade is actually sold or can the firm rate increase the value of its stock in trade, to the extent, the excess amount paid to the outgoing partner.?
The entries in the books of account shall be that excess amount payable to the specified person shall be credited to the account of specified person and it will be debited in the trading account towards the cost of purchase. In other words stock-in-trade value shall be increased by the like amount as per the excess payment made to the specified person. This will avoid double taxation of the same amount again when the stock is sold.
Source : AIFTP Journal November 23