Krishna Srivastava (Professional Practice) (92 Points)
11 June 2011Whether Cost of Capitalization of a machine includes raw material or semi finished goods utilized for trial run of a machine.
This is not a new project but a new machine has been imported for an existing business for specific purpose
CA K. K. Srivastava
Joey Tribbiani
(fdg)
(2010 Points)
Replied 11 June 2011
No,FG and SFG utilised during the trial run are not capitalised,rather the sales realisations of the produce is deducted from the trial run expenses. Rectify me if I m wrong
CA ADITYA SHARMA
(CA IN PRACTICE )
(16719 Points)
Replied 11 June 2011
any expense incurred on trial run of the machinery should be capitalized
Anit Sharma
(CA Final student )
(460 Points)
Replied 11 June 2011
| Originally posted by : future ca | ||
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yes it will be capitalised |
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Anit Sharma
(CA Final student )
(460 Points)
Replied 11 June 2011
As per provisions of AS 10 'Accounting for Fixed Assets',
expenditure incurred on startup and commissioning of the project, including the expenditure incurred on test runs and experimental production, is usually capitalized as construction cost.
However, the expenditure incurred after the plant has begun commercial production i.e., production intended for sale or captive consumption, is not capitalized and is treated as revenue expenditure that will go to P/L Accounts ...
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Anit
rahul
(Chartered Accountant)
(5572 Points)
Replied 11 June 2011
| Originally posted by : Anit | ||
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As per provisions of AS 10 'Accounting for Fixed Assets', expenditure incurred on startup and commissioning of the project, including the expenditure incurred on test runs and experimental production, is usually capitalized as construction cost. However, the expenditure incurred after the plant has begun commercial production i.e., production intended for sale or captive consumption, is not capitalized and is treated as revenue expenditure that will go to P/L Accounts ... ----------------------- Anit |
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Good Explaination ...
| Originally posted by : future ca | ||
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any expense incurred on trial run of the machinery should be capitalized |
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Yes i too feel the same... it should be capitalised.... even though it is not a new project....
vandana
(Accounts Officer)
(33 Points)
Replied 12 June 2011
yes it is very clear with AS 10... it will be capitalized..
CS,CA F,Numrologi TusharSampat
(CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert)
(85930 Points)
Replied 12 June 2011
| Originally posted by : vandana | ||
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yes it is very clear with AS 10... it will be capitalized.. |
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AGREED.
Vinayak
(IPCC)
(119 Points)
Replied 12 June 2011
Sir,
AS - 10 is very clear on the query you asked.....
Sumit Kumar
(Audit Executive)
(278 Points)
Replied 13 June 2011
sivaram
(Asst Mgr-Taxation)
(6918 Points)
Replied 13 June 2011
As per AS-10 it should be capitalised
CAclubindia
