Civil work(foundation) after capitalisatio of machine

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

20 February 2012 We have capitalised Machine in Mar11 and now we are planning to make civil foundation to that machine to reduce manpower involved in that machine.

So wheather the civil work expensed should be capitalised or charged to P & L account and under what reason.

Regards
Bharat Trivedi

SOURAV GOEL

SOURAV GOEL (Expert)
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28 February 2012 The expenditure on civil work will enhance the Productive Capacity of the Machine, since it will reduce manpower.
There will be a recurring benefit for more than a year.

Hence the expense should be capatalized.