Dear Sir/madam, We are purchased Bus chassis on 09-feb-16 at Rs-3640000(paid) . but it body building works not yet complete, it's complete April end (approx. body building charges 4000000) not yet paid . then how to calculate the depreciation pls guide me
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Depreciation on bus chassis is less than 180 days
Replies (2)
Dear Navin,
Based on the information provided by you, it is recommended that you show the Chassis as Capital Work-In-Progress since Chassis is not a Fixed Asset, but Bus/ Truck whatever the final outcome after incorporating the body will be the final Fixed Asset.
When the body building is completed, transfer the body cost to Capital WIP and then when all the related costs (RTO Expenses, Taxes are paid) that is when the Fixed Asset is ready to use. This is when you are account for as asset. Till then continue showing as Capital WIP. There is no depreciation on Capital WIP.
Hope that resolves your query. Communicate for any further details.
Thank You!
another option is treat amount as an advance
after getting possesion of Asset charged depreciation on full amount of asset
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