16 September 2012
Dear Sir, How to treat fixed assets. How to select whether it is fixed assets? Suppose if we purchase machinery parts, then can we treat it as a fixed assets? Pls reply
17 September 2012
You can record a cost as a fixed asset when it has a future economic benefit that extends beyond one year from the date of acquisition e.g. a car, a computer, a plant /machinery, building, furniture etc. A part of the machinery which is meant for the repairs purposes wihout changing its economic benefits should be treated as inventory of spares and expensed as maintenance items when it is consumded. Depending the materiality of the item, it may be expensed on purchase itself.
Trust this helps. Happy to take further queries if required.
CAclubindia
