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Accounts head not clear

GANESH KUMAR KASHYAP (Private Job) (206 Points)

08 January 2016

DEAR SIR/MADAM,

IF COMPANY PURCHASE 10 METER WIRE FOR NEW TELEPHONE CONNECTION. WHAT IS THE ACCOUNT LEDGER FOR THIS.

1. TELEPHONE EXPENSE(INDIRECT EXPENSE) OR

2. ELECTRICAL EQUIPMENT(FIXED ASSETS)

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6 Replies

Ajit Hegde (CA - Final) (1367 Points)
Replied 08 January 2016

There are ways of accounting for this. Considering the electrical wire is an essential component for the telephone, you may capitalise this by adding the amount to telephone which might have already been capitalised.

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Anubhav (Student) (589 Points)
Replied 08 January 2016

Such a small item should not be capitalized on a stand alone basis. However its value can surely be added to cost of telephone and capitalized. It is an asset but such an item of so small value is not normally capitalized and in fact charged as expense for the year.

Ajit Hegde (CA - Final) (1367 Points)
Replied 08 January 2016

We cannot say should not be. You can capialise it and write off in the year itself if the value is less than 5000

Anubhav (Student) (589 Points)
Replied 08 January 2016

Originally posted by : Ajit Hegde
	We cannot say should not be. You can capialise it and write off in the year itself if the value is less than 5000

I had not written complete sentence and mistakenly pressed post button. I agree with you though.

Ajit Hegde (CA - Final) (1367 Points)
Replied 08 January 2016

Agree. If it is a single telephone, you can charge it to expense. Generally companies Add the cost to mobile phones and other telephones and a single amount is shown in FA schedule. My reply was in this context.