direct income basing of company nature of business and such
incomes may be releted next year eg. for
construction company - sale of flats, sale of plots,
contract income received, 2. for trading companies - sale
of the materials
if the company received any other income i.e not relating
to the nature of its business i.e indirect income.
i.e dividend on chits (not for chit fund companies),
interest received on f.d's, sale of scrap, any misc. income
and unearned commission and unscured profit & reserve for
The classification of direct incomes & indirect incomes is
based on the nature of the business. If the incomes are
directly connected with the business, then it is termed as
direct incomes. For example all fees collections are direct
income for an Educational Institution. Similarly if the
incomes are not directly connected with the business, then
it is termed as indirect incomes. For examples interest
from deposits etc...
Direct Income:- The Income gained or earned directly in any
economic activity either in business or any job
The incom gained or earned directly which is the business
activities and realted to economy
of a slaried person or profit earned on yhe sale of a
product and sale of plots and flates.
Indirect Icome:- The incom earned by other sources which is
our direct incom.
The extra income earned, may or may not
belong to any business activity
e.g interest recieved on a
fixed deposit of capital, recieving discount,profit earned
by the sale of outside assets which is not related to the
if the income is related to the nature of the business then
it will be treated as irect income if the income is not
related to the nature of the business they are doing or
registered then it would be treated as indirect income.
Suppose One asset purchased in 2006year and calculated SLN
method depreciation @10%pa for value 100000. Now middle of
the present year the assets was transfered to B company.
How can we take the accounting for previous depreciation,
asset value (transfer value) to debit B company. What is
the asset status in BS.