12 October 2011
Capacitor purchased for factory comes under Plant & Machinery or Electrical Equipments. Please clarrify. Also provide the file containing classifcation of Fixed Assets with examples. Thanks in Advance.
For the purpose of answering the same let us break the question into two parts. 1. is the capacitor an asset by itself; if the answer to the same is yes, then it should capitalised under the fixed asset block closely resembling its nature.which in this case seem's to be electrical equipment. On the question as whether the capacitor alone would be an asset or not we can refer to para 8 of the AS 10; Accounting for Fixed Assets, which speaks on identification of fixed assets.
2. If the capacitor is a part of the plant of machinery and is to be used specifically for the same plant purpose, then it has to be capitalised along with the plant and machinery thereof. Reference can be made to para 9 of AS 10 Accounting for Fixed Assets, which speaks of "Components of Cost".
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