Fixed asset

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

22 September 2014 Expenditure on energy saving machines is revenue exp or capital exp.
Approx cost of one machine is 1.25 crores.
Est life: 3 years

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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22 September 2014 what kind of exp is incurred is not mentioned/.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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22 September 2014 As the life of energy saving machines is 3 years capitalize it as asset and depreciate it for 3 years.

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CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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22 September 2014 for capitalisation life is not the deciding criteria as per AS10 on fixed assets only those exp which increases the benefits from the machines compared to previuosly assessed performance then only should be capitalise or in case the life of machine increases after incurring such exp

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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22 September 2014 This is energy saving machine fulfills the criteria can be capitalized.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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22 September 2014 by just name u cannot capitalise first the querist must ans this

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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22 September 2014 My first question is off tge topic. Cost of Machine is Rs 1.25 Crore for 3 years. How much benefits will company get fron savings in energy?

Now coming to main query. The machine needs to be capitalized no doubt. Since useful life is determined to be 3 years it will be depreciated over three years. Deprecitaion rate will be (100-5)/3= 31.67% SLM. As per Companies Act 2013 scrap value has to be 5% of cost of asset.

The rate mentioned above are in accordance with provision of Companies Act 2013.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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22 September 2014 I agree with Mr. Sanjay Gupta.

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