Query regarding creation of APPROPRIATE ACCOUNT HEAD.

This query is : Resolved

Guest

Guest (Querist)

27 December 2010 Dear Friends & Experts,

A, an individual newly opened an automobile workshop.

What is the APPROPRIATE ACCOUNT HEAD for the following items :

1. Name Board Painting for Workshop.
2. Art Work for Workshop.
3. Purchase of Materials (i.e. Hardware
pipes for workshop drainage).
4. Purchase of Electrical Materials (i.e.
for RENTED PREMISES renovation).
5. Purchase of Hardware Materials (i.e.
for RENTED PREMISES renovation).
6. Purchase of Ceiling Fan (1 No.)

I shall wait for the replies.

Thanks.
DK.

chetan soni

chetan soni (Expert)
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27 December 2010 All this expenses are incurred before starting the commercial income. Hence treated as pre operative expenses & capitalized & amortized in proper manner. Lets explain by way of expenses head:

1. Name Board Painting for Workshop : Under fixed assets & depreciation can be claim on yearly basis.
2. Art Work for Workshop : Pre-operative expenses & should be amortized in proper manner.
3. Purchase of Materials (i.e. Hardware
pipes for workshop drainage): Pre-operative expenses & should be amortized in proper manner.
4. Purchase of Electrical Materials (i.e.
for RENTED PREMISES renovation): Pre-operative expenses & should be amortized in proper manner.
5. Purchase of Hardware Materials (i.e.
for RENTED PREMISES renovation): Pre-operative expenses & should be amortized in proper manner.
6. Purchase of Ceiling Fan (1 No.): Under fixed assets & depreciation can be claim on yearly basis.

Proper manner means years in which this expenses can be recovered. The better base for the same is 5 years.