fixed assets

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

02 May 2011 purchase of a D.G set included law charges, other miscellaneous charged paid to governement authority will this cost to be capitalised

Amol Gopal Kabra (CA,CS,DISA)

Amol Gopal Kabra (CA,CS,DISA) (Expert)
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02 May 2011 If the expenses so incurred are required to be paid for acquiring the asset, then those shall be capitalised. However, if any of the portion of the expenditure is capable of reversal or subject to credit, like Excise Duty, VAT, etc., it shall not be capitalised.

Querist : Anonymous

Querist : Anonymous (Querist)

02 May 2011 these expenses are to be paid yearly like a license fees.

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Amol Gopal Kabra (CA,CS,DISA)

Amol Gopal Kabra (CA,CS,DISA) (Expert)
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03 May 2011 In such case, the initial years expenses should be capitalised. From the succeeding years they should be charged to revenue.

As in the case of vehicle purchase, we capitalise the initial insurance premium and henceforth, every year the insurance premium is recognised as an expenditure and not capitalised.