Depreciation

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siva (Querist)
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01 May 2012 In an event management company, they use speakers, lights etc. For those speakers they are stitching bags for protection. does those bags fall under the category of fixed assets? if so what is the rate of depreciation? or else where does this expenditure can be shown and how?

Mihir Doshi

Mihir Doshi (Expert)
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01 May 2012 Dear Siva,

There are many concepts to be seen before capitalisation:

Cost: IF it is below 5000 no need to capitalise the asset

Materiality: If it is material amount

Increase in efficiency: Due to such assets, capacity of Speakers is enhanced from its present level of capacity.

From my point of view, These bags are to just save spakers from dust and other allied problems.

No need to capitalise the same. You can directly expense it out.

Thanks
Mihir Doshi