Capitalize or not

Page no : 2

ayushee dey (CA Final Student) (161 Points)
Replied 13 June 2011

Originally posted by : Devang Gajjar
	As per AS-10 on "Fixed Assets", if any expenditure has increased the efficiency or useful life of the asset then it must be Capitalized and if not then charge it to P&L A/c.

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RAM BURRI (FINANCE & ACCOUNTS ) (21 Points)
Replied 13 June 2011

As per AS-10 Fixed Assets, any amount spent for the long term benfit should be considered as Capital Expenditure. Therefore, the amount spent for the Building is a Capital Expenditure which should be Capitalise fully.

Somaas Kandan (CA Final) (385 Points)
Replied 15 June 2011

Thanks all.

But what should be the treatment for the assets which was destroyed in fire?

Purushottam (CA Final) (85 Points)
Replied 16 June 2011

If the new asset has come into existence and expenditure has really increased the efficiency of the existing asset whatever it would be irrespective of the amount of expenditure should be capitalised.