What is the journal entry for purchase of an asset? How will it change if tax is paid on it?

Question

Accepted Answer

Journal entry for purchase of an asset and its tax implications.

The journal entry for purchase of an asset involves debiting the asset account and crediting the cash/bank account.
If tax is paid on the asset, the journal entry will include an additional debit to the tax account and a credit to the cash/bank account.
The tax paid on the asset will be added to the cost of the asset and will be depreciated over its useful life.
The tax paid on the asset can also be treated as an expense and can be deducted from the taxable income.
The tax rate and the method of depreciation will determine the amount of tax paid and the impact on the financial statements.

Top Jio Platforms Assistant Manager interview questions & answers