My company capitalize one asset on 31.01.2015. After commencement of asset some parts found to be of poor quality. and for which company invoke the guarantee given by the vendor. Now my question is what is the treatment of the sum received against guarantee invocation? Should it be reduced from the assets value? (if yes, what should be the treatment of depreciation provided on this amount.)or it should be recognized as income in the profit and loss account?
CAclubindia
