Capitalisation of fixed assets

This query is : Resolved

Pratik Kumar (Querist)
Follow

30 December 2011 I am conducting an audit of a company and I have some doubt about the capitalisation of fixed assets.

The company purchased sand, cement and other building material for factory building and it has been capitalised.

It is not clear whether it is used for repair or addition in the factory. But we found an invoice of a contractor for a huge amt used for addition in storage area, that amount is capitalised and we found other invoices of building material of small amount.

So pls suggest whether the small amount of building material should be capitalised or charged to P&L account.

Mahesh Paryani

Mahesh Paryani (Expert)
Follow

30 December 2011 Dear Pratik

With reference to accounting standard.

The cost incurred which increase the life of an asset or the production capacity of an asset should be capitalise.

Therefore in my opinion in your case neither it increases its life nor it increases its production capacity therefore it should not be capitalise.

Regards

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Similar Resolved Queries

Unanswered Queries

Popular
Recent

Trending Online Classes

Direct Tax Laws & International Taxation May 26,Sept 26 & Jan 27

CA Arvind Tuli

Enroll Now
Audit Fast Track Recorded Batch For May 26,Sept 26 & Jan 27

CA Aarti Lahoti

Enroll Now
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English

CA Bhanwar Borana & CA Shubham Keswani

Enroll Now

view all classess

Meet our CAclubindia PRO Members

bhavesh

Srikanthan S

rana andcompany

Pranab Banerjee

Gurunathan kannan

Subscribe Now

Capitalisation of fixed assets

Similar Resolved Queries

Trending Online Classes

Meet our CAclubindia PRO Members

Quick Links

Browse by Category

Latest Job Openings

CA Final

Accountant

GST CONSULTANCY

Senior Executive

GST CONSULTANT

Manager- Finance and Compliance