Building improvement

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

14 November 2013 dear sir
if we spent some amount for building improvement,that should be added to a capital account or not

CA Vijay Kumar Walande

CA Vijay Kumar Walande (Expert)
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14 November 2013 it depends on the sort of improvement you have made to it.

If it adds value to the building then yes, it is of capital nature.

Querist : Anonymous

Querist : Anonymous (Querist)

14 November 2013 ok sir actually my question is
1. what ever expenses made for building that will come under the assets ok
2.if i added to building ac those expenses it reduce the value of the improvement(already this i maintaining as asset).how i can i added this value
2.this should be added to capital a/c.those made exp for building or not.

please give detailed on this regard

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Nikhil Kaushik

Nikhil Kaushik (Expert)
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15 November 2013 the point is whether you have made minor repairs or major repairs/ improvements.

In case of minor repairs such as replacing a window pane should be expensed out.

But major repairs such as repairing damaged foundation beams should be capitalized as such expense help in increasing the life of the asset.

Improvements refer to certain additions etc made to the asset. For eg in case of adding RAM to a computer will increase its speed thus adding value. Such major repairs and improvements should be capitalised.

next, please understand capitalization doesn't mean that you make additions to the capital A/c. It only means that you add such expense to the asset block.