Accounting of fixed assets - computer - Accounts

Accounting of fixed assets - computer

Page no : 3

chandan kaushal (Professional) (27 Points)
Replied 28 October 2013

According to saurabh maheshwari evry new thing shud b capitalized? Bcz it will work better.This is absolutely wrong. How monitor can enhance capacity.Even hard disk has been replaced so that computer will work properly. Both expenses are revenue in nature.

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Pritika (final student) (36 Points)
Replied 28 October 2013

If it is mentioned in question that it increase the capacity then treat it as a capital expenditure otherwise revenue expenditure

vinod gajra (proprietor) (21 Points)
Replied 28 October 2013

It will be revenue expenditure if replaced with same capacity, if with enhanced capcity it will be capital expenditure.

mahesh (merchant) (56 Points)
Replied 28 October 2013

It is an asset more than use 1year that incurred a cost is called capital expenditure

Dheeraj C Kadwadkar (Assistant Manager - UK Corporate Tax) (23 Points)
Replied 28 October 2013

Any subsequent expenditure shall be capitalised only when the original cost is separately identified on initial recognition and was separately depreciated. This is the view of IFRS

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vicky agarwal (chartered accountant) (32 Points)
Replied 28 October 2013

If the expenditure is above 5000 it shd be treated as capital else revenue

CA Amit Bhartia (self employed) (21 Points)
Replied 28 October 2013

If HD is of higher capacity then capitalize..subject to materiality..else write it of..

Ravi Kumar (Audit & Taxation Executive) (26 Points)
Replied 28 October 2013

It's a capital expenditure because hard disk is an essential part of the computer without which it can not work. However you may charged monitor against revenue.

D Venkaiah (lecturer) (22 Points)
Replied 28 October 2013

It is capital expenditure

Charanjeet Singh (CA Job) (35 Points)
Replied 28 October 2013

revenue expenditure

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karan narula0718 (article) (27 Points)
Replied 28 October 2013

@ saurabh maheshwari :replacement does nt lead to enhance or improve the capacity of the principal asset BEYOND STANDARD

RAKESH (PARTNER) (26 Points)
Replied 29 October 2013

It is revenue expenditure if doent enhance the efficiency of computer if it enhance the efficiency of computer in that case difference of current market value of old HD and new HD shall br capital expenditure as per AS10

CA Devendra Kulkarni (Chartered Accountant) (39 Points)
Replied 31 October 2013

as per your question, the replacement will enhance the performance of the asset, as per AS 10, if replacement would result in enhancement of performance than previously assessed performance then such expenditure would qualify for capitalization, but you should take decision after considering materiality aspect.that is whether the amount of expenditure is such that should be capitalized or can be charged to profit and loss account..

while capitalizing both approaches shall be bourne in mind. .