Accounting as inventory or fixed asset

714 views 1 replies

There is company which stores lpg received from Ships through sea.

In this process it has bought Life Saving Jackets used for maintainance purpose.

Does above has to be categorised as part of inventory or capitalised under fixed assets?

If answer is inventory does it any way comes near to definition of tools, stores, etc??

Please reply asap.

 

 

 

 

Replies (1)

It will be stores item as it is taken exclusively for maintenance purposes.However as per AS 2 , stores that can be attached to a particular plant and have life more than a year , the same has to be capitalised along with the asset .

Hence depending upon the value and usedul life of asset , the same has to be decided

 


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