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
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.