CAPITALISATION FOR IMPROVEMENT

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Ramkrishna (Querist)
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01 June 2009 A PLANT WAS ERECTED 4 YEARS BACK .THE ASSESTS WERE CAPITALISED ACCORDINGLY. NOW THERE IS SOME PROBLEM WITH A SECTION OF PLANT WHICH IS TO RECTIFIED UNLESS TO STATR PRODUCTION. THE EXPENDITURE IS OF CAPITAL NATURE...TO CAPITALIGE THE AMOUNT SHOULD WE HAVE TO REVERSE THE ALREADY BOOKED VALUE OF THAT PART AND IF YES,THEN WHAT WILL BE THE TREATMENT OF OF ALREADY CALIM DEPERICIATION ON IT?

PLEASE CLEARIFY?

Manmohan ACA, CS

Manmohan ACA, CS (Expert)
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01 June 2009 If some receification increases the efficiency, power, speed or life of plant, then it is value addition and capital expenditute and in this case only add the cost of additional part to WDV of assets from the date of purchase.

or if the rectification does not result value addition, it is just repairs and debit it to P/L

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