If we purchase an asset of Rs.5000/- or of less than Rs.5000/- ,do we have to capitalise it or can we show it as a revenue expenditure.
3 Replies
Ratan Deep Saxena
(Asstt Manager (Accounts & Finance))
(2998 Points)
Replied 11 March 2010
it is nt cost bt the purpose is necessary for capitalisation of asset. if such assets provides future enduring benefits treats it as capital asset otherwise transfer to profit & loss account as revernue expenditure.
hope ur doubt will be cleared.
keep smiling.....
regards,
ratan
santhosh
(CA)
(636 Points)
Replied 11 March 2010
It is provided in Companies act that where the expenditure is less than Rs 5000/-.It can be written off to profit & Loss account.It need not be capitalised. Also by prudence we can say that it can be written off than deferring it by capitalising..
KRISHNA PALLAVUR
(CA FINAL)
(79 Points)
Replied 11 March 2010
In case of corporates SCH XIV says that assets which costs Rs. 5,000 or less than that should be written off in the year of acquisition itself. But provide in notes to accounts the below clause: -
Individual low cost assets (acquired for less than Rs 5000/-) are depreciated within a year of acquisition.
Regards
KRISHNA
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