Avinash Kumar (CA Final Student & Working as Deputy Manager Accounts) (79 Points)
06 August 2014Dear All,
Please advice on following...
We have purchased a material which replace old and its part of plant and useful life is approx 2 year cost is
appx Rs 1.15 Lacs. Now My concern is whether it would captalize or to be treated as revenue?
CA.Ankur Khandelwal
(Owner)
(281 Points)
Replied 06 August 2014
Only expenditure that increases the future benefits from the existing asset beyond its previously assessed standard of performance can be capitalize otherwise treated as revenue expenditure.
Tribhuvan Aditya Singh
(Student as well as Self-employed)
(3710 Points)
Replied 06 August 2014
capitalization of expense will be possible only when replacement of such part will lead to increase in future benefits and expected life of asset.
otherwise you need to treat it as revenue expenditure.
CAclubindia
