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Accounting for Broadband Internet Service Provider

sameer (student/business) (50 Points)

04 May 2017

Weather Fiber Optical cables purchased by Broadband Internet Service Provider to provide connection to customer will be treated as Purchase of Asset or it will be debited to P&L account??

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2 Replies

Baljeet Singh (CA, B.Com (H)) (954 Points)
Replied 04 May 2017

Hi Sameer,

IMO the purchase of optical cable to be installed in consumer premises can never be an asset. The confusion arises when it can be either an Input purchase or an Expense.

The ISP Company may charge installation charges from the user but it does not separately charge cable cost, it is bundled with everything. Thus, we cannot determine whether it is sold as an item or not.

So, we should book it as expense incurred in provision of services.

Let's wait for other's opinions.