Capitalization of assets.

Dear all

Motor vehicle is purchased by a company for on behalf of employees. Bill is in the name of the company itself. Out of the full cost incurred, part of the cost is recovered from employees. Now my question is at what value the asset should be capitalised.. Suppose the vehicle cost 50000(including insurance etc)..Out of which 10000 is recovered from employee.. now the company should account the asset at 50000 or 40000/-???? suggest me on what basis ur answer support like any AS / IT rules??

Thanks

Regards

Nutan

Replies (1)

Hi 

As per AS-10, company should be consider it on 40,000 only (Fixed assets value should be accounted Fair values. It should comprise all purchase price net of discount/rebates/amount recoverable from employee including taxes and other directlty attributable costs.

 

 

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