Compute the book profit of company A Ltd. using the following summarised details of profit and loss account for the year ended 31st March, 2019: Sl. No. Particulars Debit side (in lakh) Particulars Credit side (in lakh)

CS Professional · Advanced Tax Laws and Practice · PYQS · June 2019
Compute the book profit of company A Ltd. using the following summarised details of profit and loss account for the year ended 31st March, 2019: Sl. No. Particulars Debit side (in lakh) Particulars Credit side (in lakh) 1 Purchases 37 Sales 90 2 Depreciation (normal) 6 Withdrawal from reserve created in 2006 by debiting profit and loss account 10 3 Depreciation because of revaluation 4 Withdrawal from reserve created in the year 2000 without debiting profit and loss account 9 4 Other expenses 5 Withdrawal from revaluation reserve 4 5 Net profit 61 Total 113 Total 113

Answer & Explanation:

Computation of Book Profit of A Ltd. Particulars Amount (₹) in Lakh Net Profit as per P&L Account 61 Add: Total Depreciation debited to P&L A/c (6 lakhs + 4 Lakhs) (Note i) 10 Less: Withdrawal from reserve (Note ii) (10) Less: Normal Depreciation (Note iii) (6) Less: Withdrawal from revaluation reserve (Note iv) (4) Book Profit 51 Notes: Total Depreciation debited i.e. normal as well as extra because of revaluation has to be added. Withdrawal from reserve which was initially created by debiting P&L account has to be reduced. Normal depreciation (excluding depreciation because of revaluation) has to be deducted. Withdrawal from revaluation reserve (not exceeding revaluation depreciation) has to be deducted.

Topics: Income Tax Act, 1961

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